Labor Data Hits a Three Month Best

Yields rise on jobs data. Initial jobless claims came in at 217k for the week that ended July 19th, below expectations and its lowest level in over three months. Yields climbed ~3 bps in the immediate aftermath of the data, as continued labor market strength could further delay rate cuts. PMI data, which highlighted a strong services sector but a weaker manufacturing sector, had an immaterial impact on price action. Yields traded within a 3 bp range throughout the majority of the session, and the 2-year yield closed 4 bps higher at 3.92% while the 10-year yield rose 2 bps to 4.40%.

Trump visits the Fed. This afternoon, President Trump made a visit to the Federal Reserve building in Washington. The trip comes amid the agency’s ongoing $2.5 billion renovations, which have become a point of contention in recent weeks as expenses pile up. Standing next to Fed Chair Powell—both men with hardhats—Trump stated that construction costs have now reached “about $3.1 billion.” Powell shook his head in response and attributed the additional expenses to prior renovations of other Fed buildings. Ultimately, the visit and budget scrutiny seem to be another avenue through which the White House attacks Fed Chair Powell for ignoring calls to lower interest rates. Despite the public quarrel, the Fed is expected to vote to hold rates at next week’s FOMC meeting.

Azoria Capital sues the Federal Reserve. Today, Azoria Capital filed a lawsuit against the Fed for its practice of holding FOMC meetings in private, arguing that this violates government transparency laws. In the suit, the firm says, “Azoria is deeply concerned that the FOMC, under Chair Jerome Powell, is maintaining high interest rates to undermine President Donald J. Trump and his economic agenda, to the detriment of American citizens and the American economy.” In a separate interview, James Fishback, the founder of Azoria, emphasized how having insight into the behind-the-scenes can help the public understand the Fed’s policy decisions. Azoria is asking a federal court to require the Fed to hold next week’s FOMC meeting in public.