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May 09 2016

Rate Range Projection by Bank

Next week 106.00 –108.50
Next 3 months 105.00 - 110.00

The below is a topic from market news

Job market slowdown, rising wages may fit Feds playbook

A slowdown in U.S. hiring coupled with a jump in wages last month dovetails with what the Federal Reserve expected as the economy approaches full employment and is not likely to alter its interest rate hike trajectory.

The Labor Department reported on Friday that 160,000 jobs were added in April, short of the 215,000 expected by economists and below the recent monthly average of 200,000, tempering hopes of a strong economic rebound in the second quarter.

Although some investors viewed the report as a red flag for the U.S. central bank, the influential head of the New York Fed said the he wasn't too concerned by the data and that two interest rate hikes this year were still a "reasonable expectation."

"Its a touch softer, maybe, than what people were expecting, but I would not put a lot of weight on it in terms of how it would affect my economic outlook," New York Fed President William Dudley told the New York Times.

The Fed signaled in March it expected to raise rates twice this year, though prices in the fed funds futures market suggest investors see just one increase in 2016.
Some analysts said the data, especially if the rise in wages triggered higher inflation, could push the U.S. central bank closer to hiking rates, perhaps as soon as June.

"Employment was never going to continue rising at more than 200,000 a month indefinitely. Those monthly gains are simply unsustainable," said Paul Ashworth, chief U.S. economist for consulting firm Capital Economics.

Indeed, Fed officials had since late last year warned of a slowdown in hiring, noting that monthly gains of 100,000 jobs would be adequate to keep the pace of economic growth aligned with population growth. Fed Chair Janet Yellen made that point in December.

Anything over that level would mean that labor market "slack" is still being absorbed. Aprils employment report, however, indicates remaining slack may be running out.

The labor force participation rate edged down, consistent with what Fed policymakers feel is a longer-term trend given the country aging population. A recent rise in the labor participation rate had underpinned Yellen argument that interest rates should be kept low to give sidelined workers more time to return to jobs, but was also viewed as likely to stall or reverse at some point  

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