US DATA: Hire Rates Extend Push Lower In A Net Dovish JOLTS Report
The JOLTS report for June was soft across the board. The ratio of openings to unemployed continued to show signs of stabilization rather than deterioration, broadly holding levels seen for the past year, but hire rates in particular cooled further. The latter leaves greater susceptibility to any slowdown in economic activity.
- Job openings were a little lower than expected in June at 7437k (sa, cons 7,500k) after an unrevised 7769k in May.
- That decline on the month meant that the ratio of openings to unemployed was broadly unchanged at 1.06 after an unrevised 1.07 despite the already known 222k decline in unemployment in last month’s payrolls report.
- It remains close to the recent low of 1.02 in March and represents continued recent stability rather than any further moderation, having averaged 1.07 since Jun 2024. For context, it averaged 1.2 in 2019 and 1.0 in 2017-18.
- The quit rate eased to 1.97% from a marginally downward revised 2.049% that was exacerbated by rounding having initially reported at 2.06%. This is the lowest quit rate since December after some surprise increases which helped see a recent high of 2.10% in March.
- There’s a similar story for the private sector quits rate, at 2.19% after 2.27% for also its lowest since December. Whilst a small portion of the labor market, the federal quit rate dipped back to 0.5% but remains unchanged from the 2024 average prior to DOGE efforts.
- Hire rates are the most dovish aspect of the release in our minds, falling to 3.26% from 3.42% (revised down from 3.45%). This is the lowest since Jun 2024, Apr 2020 and before that 2013, whilst it compares with pre-pandemic averages in the 3.8-3.9% range for other periods of labor market tightness.
- Fed Chair Powell has in the past warned that whilst the labor market remains resilient, any downturn could see a faster deterioration in the labor market considering the already low nature of hire rates.
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US FISCAL: Available "Extraordinary" Measures To Ward Off X-Date Pick Up
Treasury reported Friday that as of Jun 25 it had $130B in remaining "extraordinary" measures (of a total $378B available) to ward off an "x-date" of running out of resources before defaulting. That's the highest in 2 weeks.
- Combined with $334B cash as of Jun 25 (after a bit of a buildup after the mid-June tax deadline), that's a total of roughly $465B in total resources available.
- We noted earlier this week that Treasury told Congress that it was required to extend its debt issuance suspension period from Jun 27 to Jul 24, in effect prolonging the use of extraordinary measures while we await a resolution to the debt limit impasse, probably through the fiscal legislation currently going through Congress.
- Realistically, fiscal dynamics so far this year point to potential for Treasury to get into September without running out of cash + extraordinary measures. That seems to be the broad market expectation.
US DATA: Cleveland, Dallas Fed PCE Medians Show Progress But Still Above-Target
The Cleveland and Dallas Fed's median PCE metrics showed a notable drop in May. All indices suggest PCE inflation running above 2%, and higher than the actual core and headline PCE measures, but pressures appear to have cooled from a pickup in the early months of the year.
- The Cleveland Fed's median PCE measure came in at 0.22% M/M, a 10-month low after April's 15-month high 0.31%. This left median PCE at 3.01% on a Y/Y basis, down from 3.06% prior for a the joint-lowest (with Feb) since September 2021.
- The Dallas Fed's annualized median rate fell to 2.01%, from 2.65% prior for a 10-month low. The 6-month annualized rate edged lower to 2.74% (2.76% prior), a 4-month low, with the Y/Y rate ticking down to 2.55% from 2.56%, echoing the Cleveland Fed for the lowest reading since September 2021.
USDCAD TECHS: Pivot Resistance Remains Intact
- RES 4: 1.4111 High Apr 4
- RES 3: 1.4016 High May 12 and 13 and a key resistance
- RES 2: 1.3920 High May 21
- RES 1: 1.2710/3803 20- and 50-day EMA values
- PRICE: 1.3658 @ 16:23 BST Jun 27
- SUP 1: 1.3618 Low Jun 26
- SUP 2: 1.3540 Low Jun 16 and the bear trigger
- SUP 3: 1.3503 1.618 proj of the Feb 3 - 14 - Mar 4 price swing
- SUP 4: 1.3473 Low Oct 2 2024
USDCAD has pulled back from its recent highs. The primary downtrend remains intact and short-term gains appear to have been corrective. Key support and the bear trigger has been defined at 1.3540, the Jun 16 low. Clearance of this price point would resume the downtrend. Any reversal higher would instead signal scope for a stronger retracement. Pivot resistance to monitor is at the 50-day EMA, at 1.3803.
