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Has US hiring started to cool?

Will a weak US jobs report change the Fed’s calculation for July?

US hiring is expected to slow in June as economists bet that higher interest rates, slowing growth and a sharp slump in stocks will have bitten labor market growth.

The labor department is expected to report that the US added 275,000 jobs in June, according to a Bloomberg poll, down from the 390,000 added in May. The unemployment rate is expected to remain stable at 3.6 percent. Average hourly wages are expected to rise 0.3 percent month-over-month, also in line with May’s figure.

The Fed has argued that there is room to aggressively raise interest rates due to the strength of the US economy, including the job market. Evidence of a slowdown could potentially curb the Fed’s appetite for jumbo gains. Weak data in the US, including production data from the Institute for Supply Management on Friday, has contributed to lower market expectations of Fed policy.

The market is currently betting that the Fed’s key interest rate will be 3.2 percent by the end of the year, compared to 3.4 percent a week ago.

On the jobs report “we are concerned that even a single printout of the payrolls the [Fed’s] thinking,” said Ian Lyngen, head of US interest rate strategy. What’s more, “the prospect of this being the month when hiring is limited.” Kate Duguid

How high will Turkish inflation go?

While the US and Europe are concerned about annual inflation of nearly 10 percent, the official rate in Turkey is expected to rise to 80 percent when June data is released on Monday.

President Recep Tayyip Erdoğan’s refusal to allow the central bank to raise borrowing costs — coupled with high global commodity prices and a weak lira — has put prices on a seemingly never-ending upward trajectory. Where will it stop? Turkish officials say the rate will fall around the beginning of next year thanks to the numerical impact of high inflation in late 2021.

They have also taken steps to curb credit growth and unveiled savings plans to support the lira. Goldman Sachs predicts inflation will fall slightly to 65 percent by the end of 2022. But Per Hammarlund, chief emerging markets strategist at Swedish bank SEB, warns of the dangers of an alternative scenario.

“I see a great risk that we will see inflation accelerate as the government is more focused on supporting growth than controlling inflation,” he said. The government’s decision last week to raise the minimum wage for the second time in six months could exacerbate the problem.

Hammarlund said: “Hey [Erdoğan] tries to make up for the loss of purchasing power, but it means inflation is rising. Every time they do this, it feeds new inflation.” Laura Pitel

Will the Reserve Bank of Australia raise rates?

The Reserve Bank of Australia became one of the first central banks in an advanced economy to tackle post-lockdown inflation when it abandoned its curve-controlling policy in November last year. In June, it raised its benchmark rate by 0.5 percentage point, the most in 22 years.

Despite the policy tightening, the RBA has had to raise its forecast for headline inflation, which is now expected to peak around 7 percent by the end of this year, well above its target range of 2 to 3 percent. Analysts at Bank of America say that number is still too conservative and the RBA will hike rates by another half a percentage point to 1.35 percent on Tuesday.

Given the tight labor market in the country, the bank has plenty of room for that, analysts at Westpac say, adding that a cash interest rate of less than 1.5 percent would remain in the “stimulative zone”, something the RBA itself minutes noted in her last meeting. William Langley

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