Nomura US Economic Weekly: Data Support the Fed Staying on Hold

Nomura's US Economic Weekly argues that recent economic data support the Federal Reserve keeping interest rates unchanged. July nonfarm payrolls unexpectedly fell by 23,000, far below Nomura's forecast of 130,000 and the market consensus of 80,000, with prior months revised sharply lower. Details in the household survey improved, however, and the unemployment rate declined for a second consecutive month to 4.1%, the lowest level since January 2025. On inflation, Nomura expects July core CPI to rebound moderately to 0.180% month-over-month, below its first-half average, while core PCE is projected at 0.211%, indicating that disinflation continues to make progress. July core goods inflation is expected to be flat month-over-month, and supercore CPI should rebound from June's -0.203%. Retail sales are forecast to fall 0.2% month-over-month as the boost from unusually strong second-quarter spending fades. The July CPI, due August 12, is expected to rise 0.104% headline, with core at 0.180%; July retail sales are due August 14. Slightly dovish employment data, a moderate core CPI projection and an expected pullback in consumer spending together underpin Nomura's view that the Fed will hold rates steady at upcoming meetings. No specific recommended stocks were given.