This morning, markets are reacting to a report consumer spending and personal incomes were flat in June as well as the Fed’s recognition that the pace of recovery is weakening. The 10-year note has rallied overnight to its lowest open in over a year at 2.90%.
Fed Chairman Bernanke spoke yesterday in South Carolina in what has been characterized as a depressing event, and made two noteworthy comments. First, he reiterated his optimism that consumer spending would pick up in the 3rd quarter implying that he is leaning toward taking no new easing action in next week’s FOMC meeting. Second, he continued his advocacy of extending the Bush tax cuts (at least in part) saying that lawmakers need to be careful not to tighten, further slowing down the weak recovery.
The first Friday of each month the Labor Department releases the jobs data for the previous month. This Friday the expectation is another 60,000 jobs were lost in July after a decline of 125,000 in June.
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