A deterrent rhetoric of a key representative of the Fed and expectations of a new employment report in the US

Let’s pin down two key events that will have an impact on the behavior of the US stock market until the end of the week:

1.      Debates over Fed’s further support of the economy are still going on. Yesterday, the Fed Vice Chair, Richard Clarida, who has been baptized by media as the main architect of the current financial system of the USA, made a claim that the conditions for raising the interest rates will have emerged not earlier than by the end of 2022.

2.      The July labour report will be published on Friday. It is worth bearing in mind that the yesterday’s employment data by ADP presented extremely negative numbers: with a forecast value at about 695k of the unemployed in the non-farm sector, the actual value ended up being 330k which is less than a half of the expected figure.

Based on this, it is possible to conclude that the weakness of the labour market and Fed’s determination to stick to the existing policies will be strong detterent factors playing against tightening monetary policy in the medium term.