Summary
United States: Light Still Green for the Fed to Hike Despite Soft Jobs Report
- June hiring data came in short of expectations and signal the recent trend in hiring is clearly lower. But continued economic resilience and generally robust incoming data still give the Fed the green light to resume monetary policy tightening on July 26.
- Next week: CPI (Wed.), Consumer Sentiment (Fri.)
International: Encouraging Economic Signals from Japan
- The Bank of Japan’s Tankan Survey offered an early indication that Japan’s recovery continued, and perhaps even gathered momentum, during the second quarter. The results suggest some upside risk to our 2023 GDP growth forecast of 1.2% and are also a factor that could eventually see a hawkish Bank of Japan policy shift later this year.
- Next week: Reserve Bank of New Zealand Policy Rate (Wed.), Bank of Canada Policy Rate (Wed.), U.K. Monthly GDP (Thu.)
Interest Rate Watch: Is It a Dud? Better Be Sure Before You Walk Up to It
- Happy 247th anniversary to the United States and happy one-year anniversary to the inverted yield curve. In this week’s Interest Rate Watch, we mark the occasion and note that the spread between 10-year and 2-year Treasuries reached its largest gap in 40+ years. How long is it safe to turn a blind eye on the inverted curve?
Credit Market Insights: Main Street Lending Conditions Tighten in First Quarter
- Last Friday, the Federal Reserve Bank of Kansas City released its Q1 Small Business Lending Survey (SBLS). The survey provides the first snapshot of lending activity and terms for small businesses, a critical component of the nation’s economy, since the banking turmoil in Q1.
Topic of the Week: Digging Deeper into the Surge in Manufacturing Construction Spending
- Manufacturing construction continues to boom, per the latest construction spending data covering the month of May reported this week. The upsurge in new manufacturing projects has been a boon for several regions and largely reflects the build-out of electric vehicle supply chains and semiconductor manufacturing facilities.
