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US NFP and inflation releases complicate the Fed path for dollars
BNY strategists peg expectations at roughly 80,000 July NFP jobs and argue inflation stickiness plus supply shocks may keep US rates pricing unsettled.
BNY strategists John Velis and David Tam said the July Nonfarm Payrolls report and upcoming CPI releases are central inputs for how markets may price the Fed path, leaving the US dollar vulnerable to shifting rate expectations.
They noted consensus expectations around 80,000 new jobs, with a payrolls “breakeven rate” near 50,000 per month needed to keep unemployment steady due to slower labor force growth than in the pre-pandemic period.
The strategists argued a weaker NFP print could weigh on 2-year yields and rate-hike expectations, but they cautioned that sticky inflation is being affected by supply shocks and uncertainty around AI related capex, which may complicate inference about jobs and productivity.
They also pointed to constrained labor supply and the still emerging outlook for the “new Fed” as reasons markets may not have reached a steady pricing state yet, with additional NFP and two more CPI prints following the initial report, plus a Jackson Hole speech from Warsh later in the month.