Jobs Report Gives Powell a Little More Runway on Rates

The Federal Reserve’s runway for raising interest rates to tackle the worst inflation in 40 years just got a little bit longer after a Labor Department report Friday showed unemployment remained near generational lows in June.

That means the Fed is likely to deliver on another 75-basis-point increase in the fed funds rate this month and may have room to push rates toward 4% if needed. The bond market is wasting no time adjusting to that new reality.

As the latest report showed, predictions of the economy’s imminent demise have been greatly exaggerated.