FIREWORKS WATCH IN EARLY JULY FOR THE FEDERAL RESERVE / THE WALL STREET JOURNAL

FIREWORKS WATCH IN EARLY JULY FOR THE FEDERAL RESERVE

By Jon Hilsenrath

Thursday, June 25, 2015

Richard Drew/Associated Press

Fed watchers can mark their calendars with the following dates: July 2, July 8 and July 15. During that span of 13 days next month, the Labor Department will release its next jobs report, minutes of the Fed’s last policy meeting will be released and Fed Chairwoman Janet Yellen will begin two days of testimony presenting the central bank’s semiannual report to Congress. The sequence of events could provide the makings for important disclosures on the central banking beat.

The jobs report will be released on a Thursday rather than the traditional Friday because of the July 4 holiday. As the Fed gets closer to raising short-term interest rates, these jobs reports take on more significance. Confirmation of continued progress and reduced slack in the labor market is central to the Fed’s decision on raising interest rates. Another batch of monthly payroll gains of 200,000 or more and a reduction in the jobless rate will move the Fed closer to a September interest rate increase.

Minutes of the Fed meeting – the next batch released July 8 – are an increasingly important signaling device for the central bank as liftoff approaches, as they are likely to reveal the contours of the Fed’s discussion about rates. The April minutes provided the key clue for the June meeting: “Many participants … thought it unlikely that the data available in June would provide sufficient confirmation that the conditions for raising the target range for the federal funds rate had been satisfied.” Minutes from the June meeting, likewise, are likely to set the tone for the July and September meetings.

On July 15 Ms. Yellen begins two days of testimony before Congress. She will start out before the House Financial Services Committee. By then she will be armed with more information on the economy’s performance – including that earlier jobs report — and could provide the next big clues on where the Fed is heading. Much of her first day before combative House Republicans will likely be consumed in questions from lawmakers on ongoing investigations into leaks from the Fed. It will be a test of her composure. Because Ms. Yellen is not attending the Fed’s annual retreat in Jackson Hole, Wyo. in August, it will also be one of her key moments in the spotlight this summer.