7 Sep 2015
NFP data points towards September lift-off – BAML
FXStreet (Delhi) – Ian Gordon, FX strategist at BAML, notes that the recent employment report has left the doors open to Fed for a rate hike as early as September.
Key Quotes
“The August Employment report leaves the Fed open to a September hike. It’s a close call, but remains their base case. Despite the headline payrolls miss, it is hard to argue the totality of the August employment report was not a strong one.”
“The report meets the relatively low threshold the FOMC set in the July statement for “some further improvement” in the labor market providing “reasonable confidence” labor market gains will generate inflation over time.”
“The report does not suggest the market should fully price a September hike, but the contours of the report are consistent with the tightening labor market dynamics FOMC members expect to spur wage and price inflation over its forecast horizon, its key criteria to hike rates.”
“Evidencing the continued tightening of the labor market, the unemployment rate fell to 5.1%, on top of Fed estimates of NAIRU. Additionally, the index of aggregate payrolls grew 0.7% M/M, its second fastest pace this year suggesting healthy gains in aggregate consumption power. Lastly, the 6-month moving average of monthly payrolls remains above 20,000, the level considered a Fed threshold.”
Key Quotes
“The August Employment report leaves the Fed open to a September hike. It’s a close call, but remains their base case. Despite the headline payrolls miss, it is hard to argue the totality of the August employment report was not a strong one.”
“The report meets the relatively low threshold the FOMC set in the July statement for “some further improvement” in the labor market providing “reasonable confidence” labor market gains will generate inflation over time.”
“The report does not suggest the market should fully price a September hike, but the contours of the report are consistent with the tightening labor market dynamics FOMC members expect to spur wage and price inflation over its forecast horizon, its key criteria to hike rates.”
“Evidencing the continued tightening of the labor market, the unemployment rate fell to 5.1%, on top of Fed estimates of NAIRU. Additionally, the index of aggregate payrolls grew 0.7% M/M, its second fastest pace this year suggesting healthy gains in aggregate consumption power. Lastly, the 6-month moving average of monthly payrolls remains above 20,000, the level considered a Fed threshold.”