In the previous commentary, we promised a chance at a “two-fer” which could help put pressure on interest rates to ease down in the second half of the year. We have already had a decent move downward in interest rates, but there is so much more work to be done in this regard. On Friday we had the release of the jobs report, which represented the first leg of the “Two-Fer.” How did we do?

The economy added 206,000 jobs last month, which was in the range of expectations. However, the previous two months of job growth were revised downward by 111,000, lowering the net job gain. The headline unemployment rate rose one tick to 4.1%. Also closely watched by the Fed, wage growth increased 0.3% from the last month, and 3.9% from last year. Wage growth is slowing but still higher than the Fed’s inflation target of 2.0%. Overall, this report represents a positive first step in the two-fer that we were hoping for. Job growth is moderating, and inflation continues to cool.

As luck would have it, the second step is happening this week as well. The Bureau of Labor Statistics will be releasing both the Consumer Price Index (CPI) and the Producer Price Index (PPI). After the release of the jobs report, these inflation indices are of the utmost importance with regards to the mood the Fed will be in when they meet at the end of this month. Most market prognosticators are not predicting a move in July, but even a softening of tone could be helpful in bringing long-term rates down further. Let’s see what happens later this week.