US Jobs & Fed Outlook (with Nathan Hager)

Edward Harrison sees a resilient US labor market with ~200k monthly job gains, supported by strong personal income/spending. With PCE inflation at 4.1% (double the Fed's target) and wages trending up, he expects the Fed to hike sooner than markets price in - potentially two hikes in 2026. The data suggests continued economic strength but persistent inflation pressure.

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Oil

Metals

USD

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Edward Harrison 7.5

US Jobs & Fed Outlook (with Nathan Hager)

ndx

Higher rates and persistent inflation create headwinds for growth/tech stocks. Harrison's hawkish Fed view implies pressure on NDX valuations.

rut

Resilient labor market supports small caps, but rising rates and inflation pressure offset. No strong directional signal for RUT.

yields

Harrison expects the Fed to hike sooner than markets price in, which would push Treasury yields higher in the near term.

Nathan Hager

Asks if the low-hire, low-fire labor market is shifting ahead of June non-farm payrolls data.
Edward Harrison

Last month's 172k jobs added broke the low-hire streak; with upward revisions, the 3-month average is 188k, approaching 200k/month. This indicates a steady labor environment.
Nathan Hager

Asks what underpins the labor market resilience that has surprised economists.
Edward Harrison

Resilience in personal income and spending is key. Personal spending rose 0.7% month-on-month, personal income also up 0.7%, both above expectations. This brings inflation with it - headline PCE at 4.1%, double the Fed's target.
Nathan Hager

Asks if wages are keeping up with price pressures.
Edward Harrison

Closer to full employment increases chance of wage growth. May's average hourly earnings were 3.4% year-on-year, expected to rise to 3.5%, giving people wherewithal to deal with inflation.
Nathan Hager

Asks if Fed Chair Warsh's bias toward reining in inflation is justified, and what to expect regarding a rate hike.
Edward Harrison

The Fed will hike this year. Market expects one hike in October, but given the inflation picture, a hike is likely sooner than markets expect. Depending on the jobs number, we could see markets pricing in an earlier rate hike and potentially two hikes in 2026.

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