While the stronger than expected 2Q GDP reading may ease some worries about the economy's staying power, analysts point to the core PCE price index, which came in a higher-than-expected 2.9%, as something that could trouble the Fed. "While this is higher than target, it is falling and coupled with a robust economic growth figure, it lessens the pressure on the Federal Reserve to cut rates next week," says Emma Wall of Hargreaves Lansdown in a note. Odds of a September cut remain around 90% on the CME's FedWatch tool. "We expect an interest rate bonanza in September with rate cuts from the Fed, European Central Bank and the Bank of England. For investors looking at US equities, we think there are opportunities in small cap where there are better value stocks, despite recent pull back from Mag7," Wall adds. ([email protected]; @kirkmaltais)
After little change in April, average weekly earnings in Canada rose in May, a sign the risk of inflationary pressures from pay haven't gone away despite expectations wage growth will slide as the jobless rate rises and immigration continues to swell the labor force. Average earnings rose 0.8% on-month in May, Statistics Canada data shows. On-year average weekly earnings climbed 4.2% following a 3.8% increase in April. Average weekly hours were steady for the month but up 0.6% on a year earlier. Overall payroll employment in Canada rose 0.2% in May, a fifth straight monthly increase, and job vacancies were unchanged after declines three months running. ([email protected]; @RobbMStewart)
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