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BBH: FOMC meeting, inflation, jobless claims highlight U.S. economic calendar

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(Kitco News) - A Federal Open Market Committee meeting, inflation data and weekly jobless claims will be among the most widely watched economic events in the U.S. this week, said Brown Brothers Harriman. This will all come on the heels of Friday’s surprise 2.5 million rise in May nonfarm payrolls when markets had been expecting a 7.5 million decline due to COVID-19 lockdowns. “The data are telling us that the U.S. economy is responding to the unprecedented fiscal and monetary stimulus now in place,” BBH said. “The biggest takeaway is that the Fed is likely to remain on hold for the time being. Yet that still means the Fed is purchasing massive amounts of bonds every week and pushing more and more liquidity into the system. The Fed’s balance sheet has grown a whopping 70% since the end of February and it will continue to grow.” No policy changes are expected from the FOMC Wednesday, but BBH noted policymakers are “no longer constrained by the calendar in terms of policy decisions.” They have announced changes and new programs between meetings during the COVID-19 crisis. Meanwhile, BBH said that weekly continuing jobless claims may give a better picture of the labor market than initial claims. For the survey week containing the 12th of last month, which is when monthly employment data are compiled, continuing claims fell 4.1 million, which suggested that markets were being too pessimistic about May jobs data, BBH said. “Weekly initial jobless claims are expected to rise 1.55 million versus 1.877 million last week. If so, this would mean that around 44 million have filed jobless claims over the last 12 weeks,” BBH said. “Obviously, this number does not jibe with the monthly jobs data and overstates the job losses due to double counting, fraud or other factors.” Meanwhile, the Consumer Price Index is due out Wednesday and the Producer Price Index on Thursday

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