Summary
United States: July Cut Bites the Dust; September Hanging on Edge of Its Seat
- The strong job gain and rebound in average hourly earnings in May reaffirm our expectation that a rate cut remains some time away and is increasingly dependent on a few slower inflation reports. Next week’s CPI report and the FOMC’s Summary of Economic Projections are now in focus.
- Next week: NFIB (Tue.), Consumer Price Index (Wed.), Producer Price Index (Fri.)
International: G7 Central Banks Ease into Summer with Rate Cuts
- This week, the Bank of Canada lowered its policy rate by 25 bps and offered comments that leaned dovish in tone; we forecast another 25 bps cut in July. The European Central Bank (ECB) also delivered a 25 bps rate cut, a communicated and somewhat cautious stance for monetary policy going forward. We look for an ECB rate pause in July.
- Next week: U.K. Monthly GDP (Wed.), Australia Employment (Thu.), Bank of Japan (Fri.)
Interest Rate Watch: Dots Headed Higher
- The FOMC will release an updated Summary of Economic Projections (SEP) coinciding with its policy meeting next week. Price pressures have held relatively firm in the months following the last SEP, leading us to anticipate an upshift in the median dot. We also expect longer-term interest rate expectations to edge higher, reflecting the possibility of greater underlying economic potential.
Credit Market Insights: Personal Interest Expenses Are Stacking Up
- Households have been under ever-increasing pressure from high interest rates, leaving those that carry a balance on their credit cards or those paying off an auto loan saddled with more personal interest expenses. As the Fed has raised rates at the fastest pace in four decades, the interest expenses consumers have incurred on consumer loans have soared.
Topic of the Week: Fire and Ice: The Economics of the 2024 Stanley Cup Finals
- As the heat of June arrives, with it comes the end of the NHL season and a battle for the most coveted prize in ice hockey, the Stanley Cup. This year’s finals feature the Florida Panthers out of Sunrise, Florida, and the Edmonton Oilers out of Alberta, Canada. In just about every sense, these two cup cities could not be more different.
 also delivered a 25 bps rate cut, a communicated and somewhat cautious stance for monetary policy going forward. We look for an ECB rate pause in July.){kind=link}