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Why MNI
MNI is the leading provider
of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.
FED
There is a divergence of opinion about not just how long it will take for the economy to reach full employment - key to the Fed's tightening timeline - but also about how far we are from full employment in the first place.
- Take St Louis Fed President Bullard's contention that despite a high overall unemployment rate (6.1% in April), labor markets are "tight" based on the number of unemployed persons to vacancies.
- Whereas in a paper dated yesterday, SF Fed researchers take an opposing conclusion: that "labor slack is higher than implied by the current headline unemployment rate".
- They see unique features in the pandemic labor market, which are "causing unprecedented deviations from the normal historical relationships among a wide range of labor market variables"
- Looking at 26 data points, they produce the chart below, and explain that a positive deviation = the measure signals more slack in the labor market than would be expected with a 6.1% unemployment rate; negative deviations suggest the opposite. For example, the participation rate suggests much more slack than you would expect; but planned small business hiring suggests less slack.
- Their conclusion overall is that the negative signals "provide a better read than do the positive signals", implying that we should eye upcoming Payrolls figures with that in mind.
Source: SF Fed
Why MNI
MNI is the leading provider
of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.
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