Unsatisfactory Unemployment

With the unemployment rate at 6.6%, dangerously close to the 6.5% level at which the Fed has repeatedly suggested they will start raising short term rates, expect some quick Fed backpedalling. With wages stagnant, labor force growth weak and tapering having barely begun, a rise in short term rates will not happen. The Fed will either overtly deemphasize the unemployment rate or reduce the threshold to 6%. Expect the former.