Summary
United States: “The Downside Risks to the Employment Mandate Are Real Now”
- We have just concluded what will become a historic week. The July employment report brought with it a crossing of the Sahm Rule threshold. That means we’re either headed for recession, or about to break yet another recession rule this unique cycle. Either way, the Fed is getting ready to cut. We still see a 25 bps cut in September, though growing risks to the employment side of the Fed’s mandate suggest more and/or a faster pace of easing may be warranted.
- Next week: ISM Services (Mon.), Trade Balance (Tue.)
International: Global Central Banks Getting Busy
- It was a busy week for global central banks. The Bank of Japan raised its policy rate to around 0.25%, while the Bank of England delivered an initial 25 bps rate cut to 5.00%. In Latin America, the Brazilian Central Bank held its policy rate steady, the Chilean Central Bank paused its easing cycle and Colombia’s central bank kept up its 50-bps-per-meeting easing pace.
- Next week: Reserve Bank of Australia Policy Rate (Tue.), Japan Labor Cash Earnings (Tue.), Banxico Policy Rate (Thu.)
Interest Rate Watch: Open Door to a September Cut, Where Have I Heard That?
- This week’s Fed meeting noted progress on inflation and opened the door to a rate cut in September. Why does this sound so familiar?
Credit Market Insights: A HELOC Helping Hand
- Given how the consumer has surprised to the upside before in this cycle, how might consumers today look beyond their income to increase purchases if pandemic-era savings are gone and credit is less widely available? One option may be increased use of home equity lines of credit (HELOCs).
Topic of the Week: The Host with the Most: An Economic Overview of France
- The XXXIII Olympiad kicked off last Friday in Paris and will continue until Aug. 11. Though Paris is the host city, events are being held in 16 additional cities across France, with one subsite in Tahiti, French Polynesia. In honor of this year’s games, we provide an economic overview of the host country.
