Investors' Expectations of July Rate Hike Rise as Labor Market Shows Strength

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Investors' Expectations of July Rate Hike Rise as Labor Market Shows Strength

Investors are increasingly anticipating a July rate hike by the Federal Reserve, buoyed by the release of a strong ADP private sector jobs report. This report is considered a precursor to the government's nonfarm payroll jobs report by the Bureau of Labor Statistics, which is scheduled for release on Friday. While the ADP report excludes government jobs, it still provides valuable insights into the overall strength or weakness of the upcoming report.

The report also indicated that wages grew by approximately 6.4% compared to the previous year, slightly down from the 6.6% wage gains observed in May. The robust labor market and increasing wages have presented a challenge for the Federal Reserve. The strong employment figures suggest that the economy is robust enough to withstand additional rate hikes. The CME's FedWatch tool currently indicates a 91.8% probability of a rate increase this month.

 

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