Blackout before the Fed, last Fed chat wraped up - UOB

Analysts at UOB Group noted the various subsequent Fed chat after the recent May US jobs bombshell of a report.

Key Quotes:

"Boston Fed President, Eric Rosengren (voter in 2016 FOMC) who gave the keynote speech at Helsinki Central Banking Conference on Monday said that despite the May payrolls disappointment, he continues to expect “economic conditions will continue to gradually improve, which in turn would justify further actions to normalize policy, continuing a gradual return to a more normal interest rate environment.” That said, he did not give any insights on the June FOMC outlook in his speech. Rosegren acknowledged that recent economic data has been “choppy” but he estimated that at 4.7%, the US is at full employment.

St Louis Fed President, James Bullard (voter in 2016 FOMC) said in an interview with WSJ on Monday (6 Jun) that the chance of June rate hike is much lower after May jobs report. He noted that jobs report was weak, but trends in labor market remain very strong. He also lamented that the days of economy adding at least 200,000 jobs a month ‘might be over’ but that is ok. Bullard continues to keep an open mind about June, while noting that the Fed could still hike in July. In contrast to his fellow peers in the FOMC, Bullard said that the Brexit vote is not a significant issue for the US economy.

Atlanta Fed President, Dennis Lockhart (non-voter in 2016 FOMC) in an interview with Bloomberg TV (6 Jun), said the weaker May jobs report justifies patience from the Fed. That said, he did offer the explanation that the lower May jobs report could be a result of slowing job creation as the economy approaches full employment. He highlighted the need to keep watching how things develop over the next few weeks.

Lockhart also indicated that he is more inclined to think in terms of two moves between now and the end of the year, rather than three. In line with recent comments from Yellen, Brainard and Mester, he thinks that Brexit could cause spill-over effects for US economy.

After the speaking events by FOMC Chair Janet Yellen and Boston Fed President, Eric Rosengren (voter in 2016 FOMC) on Monday (6 Jun), there will be no senior Fed officials speaking in the public forums for the rest of the week as we enter into the one-week “blackout period” ahead of the 14/15 June 2016 FOMC meeting."