Has The Fed Raised Interest Rates During The Year?

In recent years, the UK's influence on Europe has cooled down. In June, the non-agricultural data showed a beautiful performance. The US stock market fought back against the ground and recorded a record high in many days. In addition, the Fed officials' speech was also more optimistic. Does this mean that the Fed raised interest rates again on the agenda this year?

Since the European Union referendum fell 5.3% on the day, the S & P 500 index has risen 8 days in the past 10 trading days, Bloomberg Statistics said this is the strongest rebound since December 2011.

The remaining two major US stock indexes also performed well.

On Tuesday, the Dow Jones industrial average rose 0.66%, at 18347.67 points, breaking its record high in 2015.

The Nasdaq composite index closed up 0.69%, at 5023.08 points, closing a new high in the year.

Non farm beauty in June

Last Friday (July 8th), the number of new non farm employment announced by the United States in June was much higher than that expected by the market, the number of non-agricultural employment increased by 287 thousand, the estimated increase by 180 thousand, and the unemployment rate at 4.9%.

In June, the labour force participation rate rose slightly to 62.7% in the first two months, a sharp decline of 0.4%.

But wage growth is still slow, with an increase of only 0.1%, an increase of 2.6% over the same period.

However, if the data in the coming months can not consolidate the strong performance of the employment report in June, the non-agricultural market easing will be short-lived.

287 thousand of non farm employment increased interest rates during the year.

Opinions vary among these organizations.

Bloomberg said that the beautiful nonfarm Reserve interest rate for the Fed is likely to remain within the year. It is expected that the Federal Reserve will raise interest rates by the end of the year, but probably only once after the general election in December.

Goldman Sachs said that the possibility of raising interest rates is about 2/3 this year, most probably in December.

The US non farm employment report June further shows that the economic growth momentum has maintained fairly well in the past three months.

Deutsche Bank expects the Federal Reserve to raise interest rates once this year, and in December.

But the bank also pointed out that the overall growth of nearly 300 thousand people must be regarded as abnormal; the monthly added value may be closer to 100 thousand in the future.

Employment data in June reduced the risk of recession, but there was reason to be concerned about the longer term.

The Bank of Paris, France, believes that the huge increase in US non farm employment will not change the Federal Reserve's expectation and maintain the Federal Reserve's expectation of not raising interest rates in 2016 or 2017.

Us non farm employment data show that employment growth is slowing down, but not as steep as last month's data.

In the past three months, the average number of new jobs is 147 thousand, and next month is expected to be near the average.

Road global investment management pointed out that the US non farm employment report in June is obviously much better than expected, which seems to be a great relief to the market, because the data imply that the US non farm data will not continue to be weak, which can temporarily make the market no longer worried about the general slowdown in the US economy.

However, despite good data, the Fed is unlikely to raise interest rates in July.

Nor do we think this accidental good data is enough to raise the Fed's interest rate soon.

In June 24th, the results of the British referendum were released. The US stocks were also sold wildly on the same day. Stock index futures rarely triggered fuses, and the S & P 500 index went back to all the gains this year.

However, the stock market crash lasted for only two trading days. Since then, the US stock market has embarked on the "Jedi counter attack" road, and has been making frequent headlines in recent major financial media headlines.

Bloomberg said that Friday's unexpected better than expected us non farm employment in June boosted the market's already rising risk appetite. The market had relatively optimistic expectations for corporate earnings, and it is expected that the Fed will not be in the short term.

These have stimulated the stock market to go up sharply.

Matt King, global head of Citigroup's credit product strategy, believes that the global central bank's purchase of assets is also the backstage driver of the stock market.

He pointed out that the global stock market plummeted at the beginning of this year. At that time, although the ECB and the Bank of Japan continued to inject liquidity, the size of the reserves in the emerging markets was shrinking, and so the net liquidity was decreasing and the stock market was also down.

Now, the global central bank's net purchases of assets have reached a record high since 2013.

He expects credit products and stocks to rise more strongly, as the ECB and the Bank of Japan buy assets faster, and the trend of emerging market foreign exchange reserves has been reversed.

But he doubted how long the policy led rebound would last unless the fundamentals kept up and rebounded.

He suspects that long term bearish investors may feel that it is not time to be short.

In other words, Citigroup believes that some long term shorts may not want to be short now because they are unwilling to oppose the central bank, not just the Fed, but the global central bank as a whole.

Fed officials' speech tends to be optimistic

George, chairman of the FOMC vote Committee and Kansas Fed chairman, said on Monday that the US non farm employment report was very popular in June. The Federal Reserve has largely implemented the dual functions of employment and inflation, which are in the best possible position. At present, the interest rate in the United States is too low. "Keeping interest rates at a low level will create risks" and support gradual increase in interest rates, "Esther George" said.

FOMC vote Committee and Cleveland Federal Reserve Chairman Meister (Loretta Mester) on Tuesday pointed out that the market's anticipation of rising interest rates is reasonable and will adhere to the path of gradual increase in interest rates.

When asked about the magnificent nonfarm data in June, Meister said that this is a positive sign that the United States is close to full employment.

FOMC vote Committee and Saint Louis Federal Reserve Chairman Brad (James Bullard) said on Tuesday that Britain will not have a lasting impact on the United States from Europe, and there is no reason to predict that the United States will fall into recession.

Nonfarm data is strong in June, but employment growth is likely to slow in the future.

He still holds a view of raising interest rates in the future.

Minneapolis Fed President Cash Kari (Neel Kashkari) said on Wednesday that he did not believe the US economy would fall into recession.

On the contrary, the situation around him convinced him that the economy of the United States was performing well.

Before taking any monetary policy, the Fed has enough time to wait for the economy to fully recover, so there is no rush to raise interest rates.

In view of the bright nonfarm businesses, the Wall Street Journal reporter Hilsenrath commented that the June Federal Reserve news agency said that the non farm data were beautiful in June, raising the Fed's interest rate hike in September.

However, since then, Gross Bill Gross has said that it is not worth the excitement of the employment report. Fed officials are most likely to be pleased with the non farm data in June, but they should not rush to take action in a short time.

Cash Kari also said that the Fed would not rely on a good report to decide whether to raise interest rates.

In response to strong U.S. stocks, PIMCO (Pacific Investment Management) economist warned in a recent article that the Fed should focus on wage growth rather than the stock market.

PIMCO analyzed in the article that the Federal Reserve should not regard a stock market that mainly made the rich as an economic yardstick, but rather pay attention to wage growth.

PIMCO points out that wage growth is the key measure of the return curve and the improvement of inflation. The Federal Reserve should clarify the two major links of "price stability" and "wage growth", rather than the constraints of the stock market.

This is similar to MST's statement on Monday: "the Federal Reserve's monetary policy should focus on promoting price stability and full employment, and financial stability should not be the third goal of monetary policy."

In a speech on Tuesday, Kun KASH Kali said that the Federal Reserve put the stock market into the interest rate decision, but this is not the key promoter. The strong stock market is not the ultimate goal of the Federal Reserve.

In addition, the summary of the monetary policy meeting of the Federal Open Market Committee, released recently, is once again regarded by the outside world as pigeon pie because of its overall tone. It is even described as a summary of the word "uncertainty".

To sum up, despite the strong non-agricultural data in June and the beautiful performance of the stock market, the rebound in these economic activities is a flash in the pan, continuing uncertainty and economic growth momentum.

The Fed is also watching the change in interest rate resolutions.

The Fed will hold interest conference again on 26 - 27 July, and is expected to keep interest rates unchanged in the current 0.25%-0.50% target area.

The latest federal funds interest rate futures data show that the expected rate of increase in the Fed's interest rate rose slightly, the rate of interest increase in July rose to 4%, the rate of increase in September rose to 9.8%, and the rate of increase in December rose to 20.3%.