Layoffs in enterprises are still limited! The number of initial jobless claims in the United States last week fell to a new low since 1969, but concerns about inflation heating up may solidify the hawkish stance of the Federal Reserve.

The number of initial jobless claims in the United States last week fell to the lowest level since 1969, indicating that layoffs in the overall stable labor market environment remain low. Data released by the U.S. Department of Labor on Thursday showed that the number of initial jobless claims for the week ending July 18 was 187,000, lower than market expectations of 212,000 and the previous value of 208,000; the number of continuing claims for the week ending July 11 was 1.796 million, lower than market expectations of 1.807 million and the previous value of 1.85 million; the four-week moving average of initial jobless claims for the week ending July 18 was 207,500, lower than the previous value of 214,300. The lower number of initial jobless claims indicates that employers are still not willing to lay off workers on a large scale. However, last month's employment report showed that many Americans have exited the labor force, which may also be one of the reasons for the decrease in the number of unemployment claims. After rising at the end of May and the beginning of June, initial jobless claims have fallen. Most economists believe the previous rise was just noise. Despite a significant slowdown in nonfarm payroll growth in June and downward revisions to nonfarm payroll data for April and May, economists say that the labor market has not undergone any substantive changes and remains in a state of "slow hiring, slow firing." The relatively stable situation of the U.S. labor market may provide support for the Federal Reserve to maintain its current stance. However, at the same time, concerns about inflation sparked by escalating tensions in the Middle East may prompt the Federal Reserve to maintain a hawkish stance for a longer period of time. As the Federal Reserve's July policy meeting approaches under the leadership of new Chairman Powell, the uncertainty about the Fed's policy path has increased significantly. With only a few days left until the meeting, there is a significant difference of opinion in the market about whether the Fed will raise rates this month, which is rare in recent years. Interest rate swap markets indicate that traders currently expect a 30% probability that the Fed will announce a 25 basis point rate hike on July 29, with a 70% probability of maintaining rates unchanged. Since becoming chairman of the Federal Reserve in May, Powell has repeatedly expressed his desire to abandon the long-standing practice of hinting at the path of interest rates through forward guidance. He believes that releasing policy signals early in the rapidly changing economic environment may limit the flexibility of decision-makers. For financial markets, this means that the risks and rewards of betting on the direction of Federal Reserve policy have increased. Investors who make the right calls stand to gain higher returns, while those who misjudge could face greater losses. However, Powell has emphasized that U.S. inflation has remained above the Fed's 2% target since the start of the COVID-19 pandemic, so the market generally expects the Fed to resume rate hikes later this year, with the biggest question being when they will act. Unlike traders, economists are more unanimous in their assessments. A survey showed that all 76 economists surveyed expect the Federal Reserve to keep the federal funds rate target range unchanged at 3.5% to 3.75% at the meeting on July 28-29. In fact, data released last week showed that the U.S. Consumer Price Index (CPI) for June fell on a month-on-month basis for the first time in six years, leading to speculation in the bond market that the Federal Reserve would maintain its current stance. However, with recent escalation of tensions between the U.S. and Iran, international oil prices have risen again. After Houthi armed groups supported by Iran claimed to have attacked two Saudi Arabian oil tankers in the Red Sea, crude oil prices surged on Friday. The pressures on the Hormuz and Bab el-Mandeb straits are threatening deeper supply disruptions, coupled with reduced buffer stocks and rising refining pressures, which will further exacerbate inflationary pressures and also enhance expectations of rate hikes. Against the backdrop of instability in the Middle East, several Federal Reserve officials expressed stronger concerns about rising prices last week. Loretta Mester, a 2026 FOMC voter and President of the Dallas Federal Reserve, became the first Fed official to call for a rate hike, saying that inflation does not seem to be returning to the Fed's target level of 2%. Jeffrey Schmidt, President of the Kansas City Federal Reserve, also said that given the possibility of further inflation risks in the coming months, inflation is his primary concern. Despite better-than-expected inflation data for June, Schmidt warned that it is too early to determine that inflation is entering a downward trend. Federal Reserve Vice Chairman Philip Jefferson also said that if inflation does not cool down quickly, the Fed should consider raising rates, but he also said that the current monetary policy situation is good.