The latest US Labor Market Report showed job creation still positive but below expectations at 187,000 in Jul (versus Bloomberg est 200,000) while the jobs prints for Jun & May was revised lower by 49,000. Jobless rate receded again to 3.5% (Jun: 3.6%), as unemployed numbers fell further by 116,000 to 5.8 million and participation rate held at 62.6%. For the fifth month in a row wage growth was above forecast, and at the same pace as Jun, at 0.4% m/m, 4.4% y/y.  

While robust wage growth added to inflation concerns, disparity in job creation was surprisingly stark within services in Jul as job increases were led mainly by health care and social assistance that dwarfed other service segments. 

After the 25-bps hike in Jul FOMC, we assigned a high probability the Fed will hold rates unchanged in Sep and rest of the year. We continue to expect no rate cuts in 2023, with the FFTR terminal rate at 5.50% lasting through this year. Data to watch ahead: Jul headline and core CPI (10 Aug).