Arguments in Favor of Weaker Payrolls
1. Decline in Employment Component of ISM Services
2. ADP Reports 117,000 Increase in Payrolls Versus 195,000
3. Drop in University of Michigan Consumer Sentiment Index
Arguments in Favor of Stronger Payrolls
1. 4-Week Jobless Claims Fall For Four Straight Weeks
2. Continuing Claims Drops to 4.295 Million from 4.69 Million
3. Challenger Reports Drop In Layoffs
4. Conference Board Consumer Confidence Index Hits 3-Month High
5. Employment Component Of ISM Manufacturing Highest Since March 2019
It is important to understand that Powell’s relaxed outlook on inflation and yields comes from a place of optimism. Powell said:
“We expect that as the economy reopens and hopefully picks up, we will see inflation move up through base effects. That could create some upward pressure on prices. There’s good reason to think that the outlook is becoming more positive at the margins.”
Powell didn’t see a reason to take steps to stabilize the bond market and stem the rise in yields.
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