Slight Adjustment in the RMB Central Parity Rate
On July 5th, the People's Bank of China announced the RMB's central parity rate against the U.S. dollar at 7.1535, a decrease of 12 basis points from the previous trading day. Recently, the RMB central parity rate has remained stable overall, reflecting the resilience of the RMB exchange rate amid fluctuations in the U.S. dollar.
U.S. June Nonfarm Payrolls Exceed Expectations
Data from the U.S. Department of Labor shows that the nonfarm payroll employment increased by 147,000 in June, surpassing market expectations of 110,000, indicating continued resilience in the U.S. labor market. Meanwhile, the unemployment rate fell from 4.2% in May to 4.1%, below market expectations, suggesting ongoing demand for labor.
Structural Mismatches in the Labor Market
Although the uncertainty brought by tariffs has reduced enterprise demand for labor, the U.S. policy to strengthen the deportation of illegal immigrants has simultaneously slowed labor supply, limiting the upward space for the unemployment rate. In addition, structural mismatches may exist in the labor market:
- Surplus of White-Collar Jobs: Government layoffs and the accelerated adoption of AI are compressing demand for middle and high-skilled jobs;
- Shortage of Low-Skilled Jobs: The tightening of immigration policies has led to a continued shortage of low-skilled jobs in some service industries and construction.
Against this mismatch backdrop, even if economic growth slows, the unemployment rate may not rise significantly.
The Fed May Delay Rate Cuts
The better-than-expected nonfarm data for June and the decrease in the unemployment rate indicate that the U.S. economy has not shown significant signs of weakness. We believe this data is not sufficient to support the Fed cutting rates ahead of schedule in the summer, with the next rate cut possibly delayed until the fourth quarter, after the phase of inflationary pressure brought by tariffs has passed.
