Hints of U.S. Labor Market Strength


Further hints are surfacing that the job market in the United States is recovering.

The total number of job openings and overall demand in hiring new employees has grown at a strong pace. According to a new study by the Bureau of Labor Statistics, the total number of job openings rose to 5.4 million by the end of April, the highest number recorded since the BLS began tracking.

International Pressure Sinks the Dollar and China will have to Wait for MSCI Index Inclusion


The US dollar’s losses have accelerated.  The key drivers are not domestic but emanate from Europe and Japan.  Evidence continues to accumulate that point to a moderate recovery in the US economy.  The JOLTS data showed job openings are at new cyclical highs.  The wholesale inventory data was also positive.  Tomorrow the US reports May retail sales.  It is expected to be among the strongest reports in many months. 

The Real Story about Real Wages


First, monthly jobs growth exceeded expectations, as employers hired 280,000 people. Second, the labor force participation rate ticked up, indicating that people who had stopped looking for work were becoming more optimistic about finding a job and thus had resumed their search for one.

Finally, average hourly earnings for all production and non-supervisory workers in the private sector grew by 2%, compared with May 2014.

Weak Aggregate Demand, Per the White House, is a G7 Problem


The last time a horse won the Triple Crown was at the start of the first dollar rally after Bretton Woods collapsed.  It has been 37 years and we think that dollar has begun its third rally since Nixon took the final step in breaking the link between gold and the dollar. 

The strong US jobs data before the weekend has strengthened views that the Federal Reserve will get the opportunity it seeks to hike rates later this year.  The dollar finished last week with strong momentum.  There has been little follow through today. 

Federal Budget Deficit Falls 15%


The U.S. Federal Government is getting more revenue, which is helping it cut the budget deficit by over 15%.

The Federal deficit fell by $68 billion to $368 billion according to the Congressional Budget Office’s May report. That decline was helped mostly by a rise in revenues, which grew by 9% on a year-over-year basis, which outpaced growth in spending, which rose only 4% on a year-over-year basis. In total, the U.S. government received $2.1 trillion in the first eight months of the fiscal year 2015.

Income Taxes Strengthen

The U.S. Adds Many Jobs and Canada Copies


The US May jobs reported was stronger than expected.  Although it will not boost the chances of a Fed rate hike later this month, a September lift-off still seems like the most likely scenario.

The Week in Review: Australia, Eurozone Mixed as Greek Default Nears


The Eurozone has seen improving inflation and unemployment figures, while a Greek default is challenging expectations of a steadily improving European economy.

European leaders continue to negotiate a settlement of the ongoing Greek debt crisis, as the Greek Prime Minister Alexis Tsipras met with Eurozone creditors to find a way to restructure the Mediterranean country’s debt load. The hope is that the two groups can find a way to help Greece avoid defaulting on its loans, which is likely to happen by the end of this month, if not sooner.

Eurozone Sees Inflation, Falling Unemployment


Two indicators showed renewed strength in European economies, as the Eurozone saw both an end to deflationary trends and a rise in employment.

Prices rose 0.3% in May in the Eurozone, according to a study by Eurostat. Services saw a 1.3% increase in prices, while core inflation rose 0.9%, an increase from 0.6% in April.

External Forces Weighing on the Dollar Obscure Data Showing a Recovering U.S. Economy


The US dollar is sliding across the board, but the impetus is not coming from the United States.  If anything, the combination of the strong auto sales figures, smaller trade deficit, and ADP jobs estimate underscore the fact that the US economy is recovering from the Q1 contraction.  Rather the trigger for the dollar’s broad retreat is the strong gains of the euro, which seem inextricably linked to the sharp bund sell-off. The 10-year yield is approaching 1.00%, which means it has doubled since Monday’s low print near 47 bp.

Slightly Better Economic News from the UK and Japan is a Good Sign


Sterling’s seven day losing streak appears to be ending today with the help of a stronger than expected construction PMI.  The Nikkei’s 12-day rally streak ended today with a minor loss, helped by profit-taking in the financials and energy space.  More domestic sectors, like utilities, healthcare and consumer staples still rallied.  News that regular pay rose 0.9% year-over-year in April, three times more than the market expected and the biggest increase since 2005 is a welcome development.  Rising wages has been a missing component to ‘Abenomics’.&nb