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U S Interest Rates Headed Higher On Jobs Report

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Wage growth could fuel the bond bears

03:01 a.m. 04/01/2006 By Rex Nutting Provided by

WASHINGTON (MarketWatch) -- The Federal Reserve is watching the data carefully these days, but it's not watching every piece of data equally.
The always-important monthly jobs report has gained even more importance as the Fed tries to finesse a soft landing in the economy, one with moderate growth and moderate inflation.
When the Federal Open Market Committee says that "possible increases in resource utilization ... have the potential to add to inflation pressures," it's talking mostly about jobs and wages.
Tight labor markets could lead to higher wages, so the theory goes. And higher wages could allow potential inflation to turn into actual inflation.
"Any sign of further acceleration in earnings growth will be interpreted by some to mean the FOMC will have to take the Fed funds rate above 5%," said Stu Hoffman, chief economist for PNC
A stronger-than-expected jobs report next week would provide further fuel for the bond bears," Hoffman said. The bears pushed up long-term interest rates from 4.67% to 4.88% this week "on fears over mounting inflationary pressures."


The upward trend of housing prices has been a key factor preventing the Bank of England from cutting interest rates in the last two rate-setting meetings.

This good news on the interest rate front coupled with the recent events in Japan (positive employment data) will continue to pressure Gordon to order the B o E to hike the rates to avoid inflationary pressures building beyone the real CPI (around 5%?).

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Hello mate,

Good to see you again. I know you put the negative spin on things a lot and get criticised sometimes, but we all appreciate the work you do here!! :)

Had a week off in Cumbria! Someone has to counter the VI spin doctors out there :) A dose of their own medicine is sometimes a good thing and in any event for those of us that see HPC as a negative any news that suggests its all coming to an end is a positive from our perspective.

IMHO, this whole HPI thing since early 2005 has been held together by propaganda and misinformation from the government, dare we say even from Mr. Honesty (Prescott) himself? The pen is mightier than the sword we might say. For awhile at least.

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  • 301 Brexit, House prices and Summer 2020

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      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%

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