Morning Report - How much slack is really in the labor market?

Vital Statistics:

	Last	Change	Percent
S&P Futures	1987.7	-1.9	-0.10%
Eurostoxx Index	3102.4	-22.2	-0.71%
Oil (WTI)	93.17	-0.8	-0.84%
LIBOR	0.235	0.001	0.21%
US Dollar Index (DXY)	82.18	0.029	0.04%
10 Year Govt Bond Yield	2.40%	-0.01%
Current Coupon Ginnie Mae TBA	106.5	0.0
Current Coupon Fannie Mae TBA	105.8	0.0
BankRate 30 Year Fixed Rate Mortgage	4.28

Markets are lower this morning on no real news. Bonds and MBS are flat.

Dull Summer Friday with no economic news. Janet Yellen is scheduled to hold a press conference at 2:30 EST, so there is the possibility of something coming out that could move bonds. 

The Washington Post has a breakdown on the Bank of America / DOJ settlement. Although the headline amount is $17 billion, it looks like they will actually pay closer to $12 billion. Of the homeowner relief, they may run out the clock on principal modifications and drag them out, as JP Morgan is doing. 

Nonvoting St Louis Fed President James Bullard argues there is less slack in the labor market than the Fed's statements imply. He argues that it is the unemployment rate and payroll growth that matters, and that the labor force participation rate doesn't add much information and is outside the purview of monetary policy. He is probably correct in that regard - I don't really see how 25 basis points one way or another on the Fed Funds rate is going to affect the long-term unemployed. That said, I don't think they move meaningfully until we start seeing wage inflation. That doesn't rule out a symbolic increase in the Fed Funds rate sometime next year. Separately, Charles Plosser thinks we should raise rates this year.