• At 8:30 AM ET, the initial weekly unemployment claims report will be released.  The consensus is for 264 thousand initial claims, up from 263 thousand the previous week.

• At 10:00 AM: The Q2 Quarterly Services Report from the Census Bureau.

• At 3:00 PM, Consumer Credit for July from the Federal Reserve.  The consensus is for credit to increase $15.6 billion.

From Tim Duy at Fed Watch: Is Pushing Unemployment Lower A Risky Strategy?

The unemployment is closing in on the Fed’s estimate of the natural rate of unemployment … Consequently, Fed hawks are pushing for a rate hike sooner than later in an effort to prevent the economy from “overhearing.” This overheating is argued to set the stage for the next recession.

Bottom Line: The Fed thinks the costs of undershooting their estimate of the natural rate of unemployment outweigh the benefits. I am skeptical they are doing the calculus right on this one. I would be more convinced they had it right if I sensed that placed greater weight on the possibility that they are too pessimistic about the natural rate. I would be more convinced if they were already at their inflation target. And I would be more convinced if their analysis of why tightening cycles end in recessions was a bit more introspective. Was it destiny or repeated policy error? But none of these things seem to be true.