Macro Briefing: 7 July 2022

* Boris Johnson to resign as UK prime minister as scandals mount
* Another 75-basis-point rate hike appears likely for July 26-27 Fed meeting
* Fed minutes show policymakers are focused on fighting inflation
* Growth for US services industry slows to 2-year low
* Demand for mortgages falls despite drop in mortgage rates
* Euro continues to slide against US dollar
* US job openings fell in May but still exceed available workers by 2 to 1:

“This is not what a recession looks like,” writes Nick Bunker, director of research at Indeed Hiring Lab. “The May 2022 Job Openings and Labor Turnover Survey (JOLTS) data obviously lags what’s happening in the labor market presently, but all signs are that it remains strong.” He notes that “If the labor market were quickly and suddenly taking a downturn, we would see employers’ demand for new hires drop and their willingness to let workers go increase. For now, we aren’t seeing a sudden move in either direction. Yes, job openings have drifted down slightly in recent months, but there are still 1.9 job openings for every unemployed worker.”

US gasoline price falls to lowest level since late-April. reports: “Marianne Kah, an adjunct senior research scholar at Columbia University’s Center on Global Energy Policy, said she expects the current drop in crude oil prices to translate to about a 12 percent decline — or about 60 cents — in gasoline prices from their peak level last month.”

US 2yr/10yr Treasury yield curve flashes new recession warning. “There’s something afoot in investor sentiment that is difficult to ignore, given the inversion is occurring with 10-year yields below 3%,” says Ian Lyngen, head of US rates strategy at BMO. “I wouldn’t say it’s a direct indication that a recession is a near-term risk. Rather it’s consistent with increased concern about recession.”