High Impact Events – June 2021 Week 3 #FOMC

The most high impact event of the month happens this coming week on 17 June 2021. The FOMC Economic Projections is when the individual members of the FOMC (Federal Open Market Committee) gives their projections and the MSM will look for indications of earlier tapering of assets from the projections. The Federal Reserve Chairman (Powell) will also give the FOMC Statement to explain the projections. I am expecting both the projections and the statement to maintain the dovish sentiment consistent with those in May.

Despite a sharp drop from its Q2 2020 peak, the 5.8% Q3 unemployment rate still remains uncomfortably high and well above the Fed’s preferred target. More worryingly, the last two monthly Non-Farm Payrolls (NFP) reports have come in below expectations, averaging just a little over 400k net new jobs per month. While this rate of job growth may be acceptable in more normal times, the US labor market is still millions of jobs below its pre-COVID levels and only growing tepidly despite widespread vaccine distribution and economic “reopening” across the country.

In other words, the to-date lackluster labor market recovery following the COVID recession is the reason the central bank is continuing with its unprecedented stimulus measures.

Again, similarly to the week of CPI announcements , I do not foresee any sudden market movements unless there’s freak miscommunication either from the projections or Powell himself.

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