Risk increased through report
The July and August employment reports will be key in determining any chance for a Fed tightening. With oil below $45 per barrel and commodities lower (see CRB index below), growth at 2.3% or so, the Fed will have to start seeing future wage inflation – even if that is not showing up either. To anticipate wage inflation though and justify a September liftoff, a decline in the Unemployment rate and/or another 225K or better, with revisions to prior months will be eyed by traders.