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In July, non-farm payrolls rose by only 73,000, leading to an increase in the unemployment rate to 4.2%. Additionally, the University of Michigan’s Consumer Sentiment index dropped from 61.7 in July to 58.6 in August, its lowest level since 2008, indicating a significant decline in consumer confidence.
On the inflation front, the Producer Price Index (PPI) surged 0.9% in July, exceeding the expected 0.2%. Year-over-year, the headline PPI climbed 3.3%, while core PPI rose 2.8%. This uptick raised concerns about potential price increases for consumers. As a result, expectations for a rate cut by the Fed have changed, with the likelihood of a 50-basis-point cut dropping to zero, and the overall chance of a September rate cut reduced to 83%.
Fed Chair Jay Powell is slated to speak at the Jackson Hole Economic Symposium on Friday, which will be crucial for insights into the Fed’s monetary policy moving forward amidst these economic challenges.
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