Summary
United States: No Fireworks from the June Jobs Report
It was a holiday-shortened week for many, but the economic data did not take a break. Nonfarm payrolls increased 206K in June; yet, downward revisions to the prior two months took much of the shine away from the headline gain. The unemployment rate ticked up a tenth to 4.1% in June, which is the highest since late 2021.
Next week: NFIB Small Business Optimism (Tue.), CPI (Thu.), Producer Price Index (Fri.)
International: Japan’s Tankan Survey Keeps Recovery Outlook Within Reach
Japan’s Q2 Tankan survey kept the outlook for economic recovery within reach. The large manufacturers’ index rose two points to +13, the large non-manufacturers’ index eased one point to +33 and capital spending plans for Japanese enterprises also firmed. Still, economic figures remain mixed, including a large decline in Q1 GDP. Against that backdrop, we expect the Bank of Japan to wait until October before it hikes its policy rate further.
Next week: Japan Labor Cash Earning (Mon.), Mexico CPI (Tue.), U.K. Monthly GDP (Thu.)
Topic of the Week: Because I Was Inverted
Two years ago today, the yield on the 10-year Treasury note fell below the two-year note. The yield curve has remained inverted since, marking the longest period in U.S. history in which the curve has been inverted and the economy has not slipped into recession.
