Core Viewpoint - The commentary from John Williams, a key Federal Reserve member, indicates potential for further adjustments in monetary policy, leading to a notable shift in market sentiment and expectations for a December rate cut [1][2][3]. Market Reaction - Following Williams' remarks, there has been a decrease in yields, particularly on the short end of the yield curve, and expectations for a December rate cut have risen to approximately 60% from the previous day [2]. - The market's reaction reflects a growing uncertainty among Federal Reserve members regarding the direction of the federal funds rate, as evidenced by the varied positions in the recent dots plot [3][4]. Federal Reserve Insights - Despite the increased speculation about a December rate cut, the expectation remains that the Federal Reserve will proceed with rate cuts at a slow and methodical pace, with no immediate cut anticipated [4]. - Some Federal Reserve officials continue to express concerns about high prices, while others highlight potential softness in the labor market, indicating a mixed outlook [5][6]. Economic Indicators - The recent jobs report showed an upside surprise in the headline number for non-farm payrolls (NFP), but revisions presented a mixed picture, contributing to market confusion [9]. - Upcoming Producer Price Index (PPI) data is expected to provide insights into inflation trends, which remain a critical focus for the Federal Reserve [10][11]. - Weekly unemployment claims are also anticipated to serve as real-time indicators of labor market conditions, offering a clearer picture of economic health [12].

Core Viewpoint - New York Fed President John Williams indicated that there is potential for further interest rate adjustments in the near term, primarily due to labor market weaknesses overshadowing inflation concerns, which has led traders to increase their expectations for a quarter-point cut at the Fed's December meeting [1][4][13]. Interest Rate Outlook - Williams stated that monetary policy is currently "modestly restrictive" but less so than before recent actions, suggesting that there is room for further adjustments to align the federal funds rate closer to neutral [2][4]. - Following Williams' comments, the odds of a rate cut increased significantly from 39% to nearly 75% [4]. Labor Market Insights - The recent jobs report showed that employers added 119,000 jobs in September, exceeding expectations of 50,000, although the unemployment rate rose to 4.4%, the highest since October 2021 [6][10]. - Philadelphia Fed President Anna Paulson expressed concerns about the labor market, indicating that the better-than-expected job growth might lead officials to maintain current rates, especially with upcoming labor data being delayed until December [5][9]. Analyst Perspectives - Global brokerages are divided on the implications of the mixed jobs data for the December interest rate decision, with some firms like JPMorgan and Standard Chartered withdrawing their forecasts for a rate cut, while others like Deutsche Bank and Citigroup maintain their predictions for a quarter-point cut [9][10][12]. - Analysts noted that the absence of November labor data could complicate the decision-making process for Fed officials [9][12]. Economic Conditions - Williams highlighted that downside risks to employment have increased as the labor market cools, while upside risks to inflation have lessened, indicating a shift in economic conditions [13]. - The concentration of job gains in acyclical sectors like healthcare may signal a potential economic slowdown, despite resilient consumer spending trends [15][16].

🇺🇸 BULLISH: Fed President John Williams says there’s still “room” for a near-term rate cut as inflation risks ease and the labor market cools. https://t.co/0EJhVpdT3Q ...

And yet on the committee, we have pushback almost. Maybe after that, Fed Governor Michael Barr had this to say. I'm concerned that we're seeing inflation still around 3%.Inflation is closer to three, that it is to two. What do you make of that argument. How persuasive is it.It's not persuasive to me, and I'll tell you why. All of the inflation excess, almost all of the inflation excess is a mirage. It's not indicative of supply demand imbalances.And so, for example, if you look at the housing market, right, ...

Core Viewpoint - The discussion highlights concerns regarding inflation rates, suggesting that the perceived inflation excess is largely a statistical mirage rather than a reflection of real supply-demand imbalances in the economy [1][5]. Inflation Analysis - Current inflation is reported to be around 3%, but the argument is made that this figure does not accurately represent the underlying economic conditions [1]. - Market rents have been stable at approximately 1% for a couple of years, indicating that the measured inflation is artificially high due to the lag in statistical convergence [2][3]. - The supply-demand imbalance that existed from 2020 to 2023 should not dictate current monetary policy, as it does not reflect the present economic landscape [3]. Monetary Policy Considerations - Monetary policy operates with significant lags, necessitating that decisions be based on forecasts rather than past data [6][7]. - The lack of recent data does not invalidate existing forecasts; rather, it provides opportunities to reassess them [8]. - Recent data trends indicate weaker inflation and higher unemployment than previously expected, suggesting a potential shift towards a more dovish monetary stance [9]. Data Dependence vs. Forecast Dependence - There is a debate on the relevance of meeting schedules in relation to data availability, with a suggestion that being excessively data-dependent may lead to backward-looking policies [12][13]. - The emphasis should be on forecast dependence to ensure that monetary policy aligns with future economic conditions rather than past data [13]. Interest Rate Decisions - There is a willingness to support a 25 basis point cut if it aligns with the broader economic needs, emphasizing the importance of not causing harm to the economy for the sake of maintaining a certain policy stance [14][15].

Economic Outlook - The economy continues to be relatively resilient with some robustness in demand from both consumers and firms [7] - Labor market has softened with slower job growth, but the unemployment rate remains relatively low [7] - Inflation remains elevated, largely due to goods and tariffs [7] - Economic growth is likely to slow a bit later this year but is expected to pick up with solid fundamentals [8] - There's evidence that demand got pulled forward [7] - Productivity growth is robust, helping to reconcile solid demand with a softer labor market [19] - Potential growth rate could be somewhat stronger, which would be good news [21] Monetary Policy - A mildly restrictive policy is considered appropriate to ensure a return to disinflation [9][10] - Hesitancy towards further rate cuts in December, considering resilient demand and potential pressures on prices [11] - Overall financial conditions are on the accommodative side [15] - Maintaining a mildly restrictive policy is appropriate to ensure disinflation, with a cautious and gradual normalization over time [23] Global Landscape - Increases in global risk and uncertainty are impacting the US economy [25] - Potential increases in global fragmentation, affecting flows of trade, capital, labor, and technology [25][27]

US inflation-adjusted wages stagnated for second-straight month, indicating a cooling labor market and continued price increases are limiting consumers’ spending power https://t.co/U8BI7UDSxX ...

Welcome back. In an op-ed for the Wall Street Journal titled, "The Democrat's challenge for the 2028 election," former Chicago Mayor Rahm Emanuel writes this in part. Much as we all celebrated our victories, the recent election results were more a repudiation of Mr.. Trump's GOP than an affirmation of the Democrats agenda. Moving forward, however, Democrats have to do more than simply muzzle their unsuccessful messages. They need to craft a narrative, an agenda that reflects America's middle class economic ...

story. I want to bring into this conversation uh Bill Egan. He is the chief investment officer of the Absolute Return Fixed Income Group at JP Morgan Asset Management.Uh we've had a wild ride in the equity markets. Uh it's been quite a thing to to see. >> These guys are stuck.>> Yeah. Given the inflation picture and the unemployment picture, they're smacking against each other in the wrong directions. >> Yeah.What's interesting, Andrew, is um you know, 10 and 30-year yields are higher now than when Fed fund ...

JOUMANNA: THIS IS "HORIZONS:MIDDLE EAST & AFRICA." EQUITY SELLOFF IN WALL STREET SPREADS TO ASIA AS INVESTORS PULLED BACK FROM RISKIER ASSETS AMID RENEWED CONCERNS OVER AI AND FED CUT UNCERTAINTIES. THE YEN WHIPSAWED AFTER JAPAN'S FINANCE MINISTER WARNED OF POTENTIAL INTERVENTION WITH PRIME MINISTER TAKAICHI POISED TO PROPOSE A STIMULUS PACKAGE. PLUS, A WAR OF WORDS BETWEEN SOUTH AFRICA AND THE U.S. OVER THE G20 SUMMIT.IT HAS BEEN SO FAR MARRED BY A DIPLOMATIC DISPUTE BETWEEN THE TWO NATIONS OVER WHAT CONST ...