NFP Report Looms as Crucial Input for Fed's Interest Rate Decision

BNY strategists John Velis and David Tam say that the upcoming July Nonfarm Payrolls (NFP) report will be a crucial input for the Federal Reserve. They expect around 80,000 new jobs, with a 'breakeven rate' near 50,000 to keep unemployment steady.

Velis and Tam highlight sticky inflation, supply shocks, AI-related capital expenditures, and constrained labor supply as factors keeping US interest rates uncertain. A weaker NFP print could lower two-year yields and rate-hike expectations.

The strategists also mention the upcoming Consumer Price Index (CPI) releases and Jerome Powell's speech at Jackson Hole later this month as key events that will influence the Fed's decision-making process.