The equity and bond market took the release of the latest Federal Reserve minutes on Wednesday evening with a fair degree of indifference. Th tone of the minutes was considered by the Financial Times hawkish, however, there was some disagreement between members as to the timing to start unwinding the Fed’s balance. September seems to remain the time they look for the next rate rise. Despite the more hawkish comments coming from the Central Bankers, interest rates around the globe remain accommodative. This may make the Fed’s job a little easier to raise rates and reduce the risk of volatility that can occur in capital markets when the Federal Reserve looks to adjust interest rates.
We discussed at the start of the week some of the green shoots of improving data from the US economy, Thursday provided another shoot. The Institute for Supply management’s services Purchasing Managers survey index reading rose to 57.4 in June, above May’s reading and above estimates.
According to the Financial Times, the services report would suggest later in the summer payroll growth could come in around 250,000. A number like this could reinforce the Fed’s view that rates should go higher in September. Later on, Friday we get the payroll data for June. Forecasts are for 180,000 jobs to be created.