what i expect from the fmoc tomorrow is an optimistic take on the conditions of the economy.nts prepared ahead of the meeting laying out the current conditions it describes the economy as robust it has been some time since the beige book described the economy as robust. that will be optimistic in the statement. chair powell will remain optimistic on the outlook. including the hope he still holds out that we get a bump in labor supply as we go into the fall >> ellen, we're almost out of time i have to ask about inflation. are you still of the opinion it is transitory? we saw jumps in the cpi not long ago. do you believe inflation is transitory and are we on track of meeting 2%? >> i think a good amount of it, not all of it, a good amount is transitory we are still looking at the underlying pickup in pressures we think most of it is transitory i think with the fed's new framework to delay mondetary actions gives them the best chance to reach the 2% goal they are looking for. >> ellen, we appreciate the insight. thanks for being here. that does it for us here on "worldwide excha

the fmoc resumes deliberations on when and how to eventually taper. is still with us. if the fed were to surprise, would the only possibility be a hawkish surprise? morgane: yes. exactly. at the moment, the markets have not changed much in terms of expectations but if we look at forecasts on when the first rate hike will happen, the forecast are now later on, maybe early 2023 instead of late 2022. the market expects the fmoc to take into account the current situation. however, the market is not expecting a massive change at this meeting. anna: what does this mean for the banking sector? or let's start with the first start, the treasury market -- what would you expect to see in treasuries? what should we watch out from the fed this week? we have also been higher than that earlier this year. i wonder where you see treasuries heading. morgane: i think the treasuries will continue to trade where they are until we have more clarity on whether this will impact more restrictions potentially impacting schools. that would have a significant impact on the econo

laura: the fmoc meetings are the highlights for the week, and that's because we want to parse throughd the shift that we saw. we looked at market expectations around that dot plot, we had seven members increase that 2022 hike. what is interesting in the fmoc's meeting was the fact the emphasis of the labor market, we have not yet seen that come through in the payrolls numbers, so it will be interesting to see how the fed is gauging that substantial further progress in order to get any hand on the tapering timeline. anna: thanks very much. thank you very much. that is it for the early markets. surveillance is up next. u.s. markets closed today, no cash trading. we do have u.s. equity features open. they do point to the downside, around .2%. that goes hand-in-hand with the weakness across equity markets this morning. with fourth of july yesterday, that is why we have no u.s. trading today. surveillance early edition is up next. this is bloomberg. ♪ [ "me and you" by barry louis polisar ] ♪ me and you just singing on the train ♪ ♪ me and you listening to the rain ♪ ♪ me and you we are th

the federal reserve and a lot of people on the fmo see want to see that -- fmoc want to see that.we have had conversations about the mystery of what august looks like or november or the first few months of 2022. carl riccadonna joins us right now, chief industry economist at bloomberg intelligence. you said restaurants and bars, maybe the other part of the nation is ok, but you say if you pull out, restaurants and bars it is a different labor picture. carl: it is absolutely a different picture. we knew the most severely impacted categories were the drivers of hiring in the recovery. while that is not a surprise, if we want to understand the underlying momentum in the economy growth, inflation, etc., we have to strip out those categories. if we take out leisure and hospitality, we see an economy certainly growing but not at the robust types of gains we are seeing in the headline numbers. if we further dig into the details, if we take out all of the vulnerable categories, dominated by leisure and hospitality but take out others that show decreases, average of hiring about 160,000 a

discuss with us what you see is the potential long-lasting effects on the labor markets and how the fmoc will approach the question of what maximum employment should be moving forward in the new norm, whatever the new norm is in the post-covid world? >> sure. so, i would say that patience will characterize our approach on that. what we saw at the end of the last expansion was people staying in the labor market more than would have been predicted by the numbers so, labor force participation kept moving up, up, up and we didn't -- to numbers that people didn't think we would see again, well above 63%. and sustained there for a couple of years that was an upside surprise. what we've seen since the pandemic is a wave of retirements. so -- and we won't really know the implications of that for some years but it could just be that that was a catchup for people who stayed in the labor market so, i guess the point is we can't really know what labor force participation is going to be and what the trend will be and what the right number is going to be. ultimately though you'll be able to tell with

trying to figure out the riddle that has been messaging from the 10-year since june when it fell post fmocason the important thing, joe, is the reason and position. was the overwhelming majority expecting a 2% for a u.s. 10-year treasury you are seeing a dramatic repositions under way with the equity market. we are coming off all-time highs posted yesterday over overnight, the news from chinese policymakers of the reversal because they are concerned about growth their view is growth is slowing and now they are witnessing that they are talking about easing or loosening policy taking the reserve ratio requirement and allowing that to be lower and have banks provided with more liquidity to put forth for customers and small businesses >> the fed is, you know, on one hand i hear something rumbling about a plan or to come up with a plan to take something away. on the other hand, i hear we're very aware that this is the economy is not a slam dunk we have the great rebound. we're ready to provide assistance if needed they are saying both i think they need to >> well, joe, they have been saying bot