The July payroll number of 215K does not move the needle any closer to a Sept. rate hike by the Fed.
Despite Fed chief Janet Yellen’s desire to raise rates, if you take Bank of England chief Mark Carney’s words earlier this week — when he kept rates at the same low level because of deflation fears on falling commodity prices and a slowing of hiring and wage growth — the US economy cannot sustain a change in interest rates independent of the jobs numbers.
Could the Fed raise rates by 0.1% in a more symbolic rather than monetary move? Yes, but it can’t move again until 2016. The December meeting is off the table for an additional rise because of the calendar. End of year window dressing for stocks and lack of liquidity could be ruinous for the markets.
Gray’s Economy stands pat in its prediction from January that 2015 will come and go without seeing a normalization in interest rates.
Besides the way equities are behaving recently, by the end of August the Dow could be in correction mode, losing 10% of its value from the May highs.