New research from the Federal Reserve Bank of Dallas is building the case for a change in the interest rate the central bank targets to achieve its monetary policy goals. ...

Core Viewpoint - There is a growing excitement about investment opportunities in 2026, driven by fiscal stimulus and accommodative monetary policy, despite concerns about market concentration and inflation [2][5]. Group 1: Market Outlook - Anticipated earnings growth is expected to be at a double-digit rate, indicating a broadening market participation beyond just big tech [3]. - The current market sentiment shows high excitement levels, but there are underlying concerns about potential bubbles, particularly in technology and AI sectors [4][9]. Group 2: Investor Sentiment - Many investors are experiencing anxiety about their significant gains over the past three years, leading to discussions about whether to sell or hold investments [6][7]. - There is a notable trend of some investors moving to cash preemptively, reflecting uncertainty about the sustainability of market gains [7][8]. Group 3: Economic Factors - Inflation is expected to rise in the early part of the year, which may impact the Federal Reserve's monetary policy decisions [5]. - The risks in the market have reportedly decreased compared to previous months, suggesting a more favorable environment for investors [5].

Core Viewpoint - The prediction markets indicate that Kevin Hasset has a 53% chance of being appointed as the new Fed Chair, while Kevin Worsh's odds have dropped to 34%, highlighting a competitive selection process for the position [1]. Economic Growth and Monetary Policy - Anticipated GDP growth is expected to accelerate due to $400 billion in fiscal policy and the Fed's rate cuts, leading to significant fiscal and monetary policy actions by 2026 [3]. - Historically, economic growth tends to accelerate from the first year of a president to the midterm year, which typically results in rising bond yields and a defensive stock market [4]. Candidates' Perspectives - Both candidates, Hasset and Worsh, believe in a productivity boom that could allow for lower Fed funds rates, with recent employment data suggesting a need for a lower neutral rate [6]. - The differences between the two candidates may be more pronounced in their approaches to the Fed's balance sheet rather than in their rate policies [8]. Balance Sheet and Financial Regulation - Worsh has been described as hawkish regarding the Fed's balance sheet, arguing it should not be at its current level, which is linked to financial regulation issues [9][10]. - The Fed is currently expanding its balance sheet to address a shortage of bank reserves, a situation expected to change with financial deregulation anticipated in 2026 [10][11].

>> PAYROLLS ARE WEEK AND WE THINK THE RISK IS ON THE DOWNSIDE. >> OUR OWN FORECAST HAS THE LABOR MARKET LOOKING RESILIENT. >> THE FED'S MANDATE IS NOT WHAT HEADLINE GDP IS DOING. >> IF THE LABOR MARKET IS WEAK, THE FED IS PRICING MORE THAN JUST CUTTING MORE THAN IS PRICED IN. >> THIS IS BLOOMBERG SURVEILLANCE WITH JONATHAN FERRO, LISA ABRAMOWICZ AND ANNMARIE HORDERN. LISA: WELCOME TO BLOOMBERG SURVEILLANCE AND IT DOES NOT SOUND RIGHT WITH STOCKS STRUGGLING TO HOLD ONTO GAINS WITH TRADERS FOCUSED ON THE DATA ...

The dollar index (DXY00) today is down by -0.28% and slid to a 2.25-month low.  The dollar is under pressure from today's Fed-friendly US economic reports on Nov payrolls, Oct retail sales, and Dec S&P manufacturing activity that bolster the outlook for the Fed to keep easing monetary policy. The dollar is also under pressure as the Fed boosts liquidity in the financial system and began purchasing $40 billion a month in T-bills effective last Friday.  Finally, the dollar is also being undercut by concern ...

Group 1 - Bitcoin and Ethereum spot ETFs experienced their largest daily net outflows in approximately two weeks, totaling $582.4 million on Monday as institutional investors reduced exposure amid market volatility and uncertainty in global monetary policy [1][2] - Spot Bitcoin ETFs saw net daily outflows peak at $357.6 million, marking the largest single-day redemption since early December, with significant selling across Fidelity's FBTC, Ark's ARKB, and Bitwise's BITB, while BlackRock's IBIT remained flat [2] - Ethereum spot ETFs recorded outflows of nearly $225 million on the same day, the largest single-day redemption since the beginning of the month [2] Group 2 - The outflows occurred despite crypto prices remaining stable, indicating that ETF flows are more reflective of institutional reallocations alongside other risk assets rather than direct crypto market movements [3] - The relationship between Bitcoin and the Nasdaq has intensified, with Bitcoin acting more like a derivative of tech stocks, leading to increased ETF redemptions during tech sector corrections [3][4] - Over the past six months, Bitcoin has declined while major U.S. indices have remained stable, with November being particularly poor for Bitcoin, and December showing a lack of sustained demand despite some growth attempts [5] Group 3 - U.S. spot Bitcoin ETF activity has been negative this month, with approximately $705 million in outflows compared to $480 million in inflows, resulting in a net drawdown of around $225 million [5] - Ethereum spot ETFs displayed a more balanced flow pattern, with about $411 million in inflows countered by $403 million in outflows, leaving the segment nearly flat overall [6] - The risk landscape has become more complicated following the U.S. Federal Reserve's recent decisions, with inflation not decreasing quickly enough and internal disagreements within the FOMC [6]

Experience suggests that labor market deterioration can occur quickly and non linearly and be difficult to reverse, in part because monetary policy lags several quarters. A quicker pace of easing policy, as I have advocated, would be appropriate, would appropriately move us closer to a neutral stance. Meanwhile, valuation concerns are bleeding into the emerging market space.MSCI's gauge of EM selling the most in three weeks. So let's get more market action now with Andrew Slimmon, Senior Portfolio Manager a ...

Joining us now for more on the markets and jobs, Joe Mato, president CIO at Newberger Berman. Joe, great to have you with us. Good >> to be here.Thank you. >> Um, it's interesting to get the jobs report now after the Fed decision. How important is this for you.>> I think the data is really important. I think the state of the labor market is one of the critical issues in terms of determining what the Fed path is going to be. And, you know, our sense is you're going to continue to see a grinding, weaker labor ...

Core Viewpoint - The state of the labor market is critical for determining the Federal Reserve's future actions, with expectations of a weaker labor market leading to a more dovish Fed stance than currently anticipated [2][3]. Economic Outlook - The expectation is for one more rate cut from the Fed, while the market is pricing in two or more cuts [4]. - Growth is expected to hold up better, and inflation is anticipated to improve, which will lead the Fed to adopt an accommodative policy [5]. - The fixed income market is projected to be less volatile in the coming year compared to the previous year, with a return to a carry trade keeping long-term rates stable [6]. Monetary Policy Divergence - There is a divergence in monetary policy globally, with some countries tightening while the US and China are expected to maintain accommodative policies [7]. - Recent Fed votes showed significant divergence among members regarding rate cuts, highlighting the importance of upcoming economic data [8]. Equity Market Expectations - The equity market outlook for 2026 is constructive, with expectations of increased nominal growth and strong earnings supported by fiscal stimulus and deregulation [8][9]. - Fiscal stimulus is expected to be front-loaded in the first half of 2026, which includes tax refunds and incentives for capital expenditures [10]. Fed Chair Impact - The credibility of the Fed chair is crucial for maintaining bond market stability, and the leadership of the new chair will significantly influence this credibility [12][14]. - All candidates for the Fed chair position are viewed as credible, and the independence of the Fed is seen as a gradual process rather than a binary state [13].

Brazil’s central bank chose to keep a degree of freedom about when it will start easing monetary policy as inflation expectations remain above target through 2028 https://t.co/bIpdbbb2oy ...