US unemployment should rise, or fall

Posted by: Paul Donovan

02 Jul 2020

Daily update

  • The US employment report comes a day early. Normally, the employment report is exciting for economists – this time, it is just means more work as we try and find the truth under the mass of data problems. The consensus range for unemployment is roughly 10% to 15.5% - so economists expect unemployment to go up or down, potentially by quite a lot.
  • The US Federal Reserve meeting minutes showed a discussion about directly controlling government bond yields versus managing interest rate expectations. The Fed seems to see guiding interest rates over the longer term as more of an important policy tool than liquidity injections.
  • Eurozone producer price inflation is due, but no one is really looking at price data to drive central bank policy in the near term. South Korean consumer prices rose slightly in June. We remain in a generally low inflation environment, with spare capacity in the global economy generally.
  • The UK government has formally offered a route to citizenship for three million Hong Kong residents (the process takes over six years). Only a fraction of those eligible are likely to take this up. The move might boost UK trend growth a little. There may also be a modest impact on urban property prices.

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