The bond market is constantly reacting to economic reports from the government and of course, statements from the Federal Reserve. But Treasury watchers should consider Walmart’s recent announcement that they are increasing worker’s wages. Starbucks, TJX (Marshalls and TJ Maxx parent) and Gap have all made similar announcements last month. These pay increases may indicate that the infamous “slack” in labor markets the Fed has referenced for years to justify their ongoing patience may finally be tightening. Employee raises at this level should spur further spending. Will all of this be enough to hit the Fed’s target inflation rate of 2%? Interest rate hikes are predicted to occur once this 2% threshold has been realized. …stay tuned… David R. Pascale, Jr.
