Fed Is In No Hurry To Raise Rates, BlackRock's Rosenberg Says

Summary

Jeffrey Rosenberg of BlackRock discusses the implications of the May payrolls report on Fed policy. He argues the Fed is behind the curve but unlikely to raise rates aggressively due to inflation dynamics and oil prices. The market is pricing in a full rate hike for the year, which he views as reasonable.

• May payrolls showed an upside surprise with a strong three-month average of 188k.
• Rosenberg notes the narrative has shifted from a weakening labor market to a strengthening one.
• He believes the Fed will move slowly and is unlikely to hike in June.
• Oil price declines are providing some relief on inflation, reducing pressure on the Fed.
• The market is pricing in a full rate hike for the year, which Rosenberg views as appropriate.
• He cautions that the headline numbers may overstate strength due to government and leisure/hospitality one-offs.
• The Fed's catch-up to market pricing is expected to continue.
• The path of inflation remains the key determinant for future Fed action.