Will sunnier U.S. jobs numbers make Fed rethink rate hike timing?

Will sunnier U.S. jobs numbers make Fed rethink rate hike timing?

https://youtu.be/4LOZzn6eFB8

by Paul Eitelman, Russell Investments

In this week’s video update:

• Will two months of strong jobs numbers and other factors put a September rate hike on the table for the U.S. Federal Reserve (Fed)?
• Bank of England (BoE) announces several big moves to help boost the British economy after fallout from the recent Brexit decision.
• New details on Prime Minister Shinzo Abe’s economic package disappoint markets.

On this week’s update Investment Strategist Paul Eitelman discusses the positive upswing in U.S. jobs numbers over the last two months, with July coming in at 255,000 and June being revised upwards. Additionally, wages increased and moved up to 2.6% (as of July). While these two factors are encouraging, along with other recent economic indicators, Eitelman cautions they will probably not make the Fed move away from a likely December rate hike. However, if economic data figures continue to be positive in the next few weeks it might change the Fed’s decision in September.

Looking at the recent impact of the UK Brexit vote after a recent downturn in the British economy, the Bank of England announced several moves that look to be encouraging for longer-term economic growth. They announced their first rate cut in seven years to 0.25%, restarted their quantitative easing program and gave banks access to cheap financing within the UK – all important factors for investors to keep their eyes on in the weeks and months ahead.

Lastly Eitelman shifts to Japan, where details of Prime Minister Shinzo Abe’s economic stimulus package were released this week, turning out that only about only about 7.5 trillion of the package was new spending; the rest was existing programs. This news, combined with the continued strength of the Japanese yen, likely contributed to the decrease of the Japanese equity market by about 3% for the week.

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