Market Updates

• Last week when speaking before Congress, Chairman Powell reaffirmed the Fed’s case for a rate cut at the next FOMC meeting despite strong June employment numbers citing slowing global growth, uncertain trade developments, and stubbornly low inflation.

• Despite 50-year record low unemployment and a tightening labor market, wage growth tumbled from 3.4% in February to 3.1% in June with lower paid workers benefiting from faster wage growth than their higher-earning coworkers.

• The Labor Department gave inflation a glimmer of hope as Core CPI registered a 0.3% spike for June—the largest increase since January of 2018. Longer maturities responded with a notable drop in price and the spread on inflation-indexed yields widened.

• The consensus is that the Fed will proceed with a quarter-point reduction in the fed funds rate at their July 31st meeting and will likely follow up with a second rate cut at their meeting on September 18th. The Fed has implied that in our current environment, the consequence of remaining sidelined outweighs any risk attributed to preemptive action.