FOMC Interest Rate Expectations

The ISM manufacturing report for July showed that the sector slowed from 56.2 to 55.5 but surpassed expectations of 54.5. As look at the breakdown revealed that orders and production were slowing with inventories building, signs that the sector is headed for a slowdown. A slight pickup in hiring was the bright spot but not enough of an improvement to impact this week’s employment report which is forecasted to show the economy lost 63,000 jobs in July with the unemployment rate rising to 9.6% from 9.5%. The lack of job growth has dim the outlook for future growth and continues to weigh on interest rate expectations with fed funds futures now only giving a 3.9% chance of a rate hike in November.


Source Bloomberg – Prepared by John Rivera