Group 1 - The Federal Reserve has cut rates for the first time this year by 25 basis points, leading to a rise in bond yields and the lowest credit spreads since 1998 [1][2][3] - The market is adjusting to a less aggressive rate-cutting cycle, with the two-year yield reflecting this shift [3][4] - There is a split within the Federal Reserve committee regarding future rate cuts, with some members advocating for one or fewer cuts for the remainder of the year [6][7][8] Group 2 - The consensus among economists suggests that there may be only one more rate cut this year, despite the Fed's recent actions [7][8] - The labor market remains a point of confusion, with expectations of upward revisions to payroll data, indicating a stable economy [10][11][12] - Inflation concerns persist, with the Fed's target of 2% being questioned as historical data suggests higher average inflation rates [14][15][17] Group 3 - The credit market is expected to perform well into the fourth quarter, supported by the Fed's rate cuts and a focus on growth [27][28] - There is a notable shift in credit spreads, with expectations of spreads moving into the 60s, despite the Fed's actions [29] - M&A activity is anticipated to pick up, which could create supply in the credit markets, although refinancing remains the primary activity currently [31][32][36]

Monetary Policy & Inflation - Minneapolis Fed President Neil Kashkari anticipates two more rate cuts from the central bank this year [1] - The Fed is concerned about potential erosion of belief in its commitment to the 2% inflation target [2] - Kashkari expresses confidence in bringing inflation back down to 2%, despite current elevated levels [4] - Tariffs have pushed inflation up, requiring policy adjustments to maintain a strong labor market [5] - Housing services inflation is steadily decreasing, and non-housing services inflation is slowly decreasing, tied to wage growth [6][7] - Core goods inflation, previously negative, has increased due to tariffs, with the impact expected to play out over a couple of years [7][8] Fed Independence & Market Signals - Widespread appreciation exists for Fed independence in maintaining low inflation expectations and defending the dollar [10] - Financial markets appear exuberant despite labor market slowdown signals, indicating policy may not be tight [17] - Labor market data shows signs of weakening, influencing the decision to cut rates, but the number of further cuts needed to reach neutral is uncertain [18][19] Interest Rates & Economic Impact - The neutral rate of interest may have increased, potentially limiting the impact of short-term policy moves on mortgage rates [14][15] - Despite concerns about national debt at $38 trillion, the 10-year yield at 41% is viewed positively [17]

Core Viewpoint - Minneapolis Fed President Neil Kashkari anticipates two more rate cuts from the central bank this year, despite concerns about inflation and the Fed's commitment to its 2% target [1][17]. Summary by Relevant Sections Rate Cuts and Inflation - Kashkari expresses confidence in the need for two additional rate cuts this year, suggesting that the current funds rate is above neutral given a 3% inflation rate [17][18]. - He acknowledges the challenge of cutting rates while inflation remains elevated, emphasizing the importance of communicating the rationale behind these decisions to the public [2][3]. Inflation Dynamics - The essay highlights that housing services inflation is on a steady decline, and non-housing services inflation is also gradually decreasing, linked to wage growth trends [6][7]. - Core goods inflation had turned negative earlier in the year but has since increased due to tariffs, which Kashkari believes may have a one-time effect rather than a persistent impact [7][8]. Fed Independence and Market Reactions - Kashkari discusses the importance of Fed independence in maintaining low inflation expectations and the dollar's value, noting that market participants generally trust that this independence will be upheld [10][11]. - Despite concerns about potential erosion of Fed independence, he observes that the bond market does not currently reflect these worries, indicating confidence in institutional stability [9][10]. Labor Market Insights - The labor market shows signs of fragility, with businesses cautious about hiring and firing, which could necessitate rate cuts as a form of insurance to prevent a significant downturn [24][25]. - Kashkari mentions that estimates for job growth needed to maintain a stable unemployment rate are around 50,000 to 80,000, suggesting a cautious outlook on labor market dynamics [22][23]. Economic Forecasting and Policy Response - The Fed is focused on forward-looking indicators, with confidence that inflation will continue to decline as housing inflation decreases and tariff rates stabilize [19][20]. - Kashkari expresses skepticism about the immediate impact of fiscal policies, such as tax cuts, on economic growth, emphasizing the need for cautious forecasting [26][28]. Technological Impact on Labor Market - The potential effects of AI on the labor market are acknowledged, but Kashkari believes these changes will unfold gradually, similar to past technological advancements [32][33].

In a new essay, Minneapolis Fed President Neil Qashqari says he sees two more rate cuts coming from the central bank this year. Steve Leeman joins uh us now with Mr. . Qashqari.Hey, Steve. And hey, Neil. >> Good morning.>> Thank you, Joe. Let's bring in Mr. . Kashkari, president of the Minneapolis Fed.Neil, let's talk about your um essay this morning, which is fascinating. And I just want to ask you uh first about one of the things that you say in your piece, which is that you're concerned that there could ...

Group 1 - The dollar index rose by +0.50% due to positive comments from Fed Chair Powell regarding inflation and expectations of limited interest rate cuts by the Fed [1] - US weekly initial unemployment claims fell by -33,000 to 231,000, indicating a stronger labor market than the expected 240,000 [3] - The September Philadelphia Fed business outlook survey increased by +23.5 to an 8-month high of 23.2, surpassing expectations of 1.7 [3] Group 2 - Concerns over Fed independence may lead foreign investors to sell dollar assets, particularly in light of President Trump's attempts to fire Fed Governor Cook [2] - The euro fell by -0.20% due to a stronger dollar and fiscal concerns, as the German government plans to borrow about 20% more than originally planned in Q4 [4] - Germany's finance agency plans to raise 90.5 billion euros ($107 billion) in Q4, which is 15 billion euros more than previously projected [5] Group 3 - The markets are pricing in a 93% chance of a -25 bp rate cut at the next FOMC meeting on October 28-29 [4] - Swaps indicate a 2% chance of a -25 bp rate cut by the ECB at the October 30 policy meeting [6] - The USD/JPY rose by +0.59% as the yen fell to a 1-week low due to a stronger dollar and reduced safe-haven demand following a rally in the Nikkei Stock Index [6]

Group 1 - The dollar index (DXY00) increased by +0.57% due to positive comments from Fed Chair Powell regarding inflation and interest rates [1] - US weekly initial unemployment claims fell by -33,000 to 231,000, indicating a stronger labor market than the expected 240,000 [3] - The September Philadelphia Fed business outlook survey rose by +23.5 to an 8-month high of 23.2, surpassing expectations of 1.7 [3] Group 2 - Concerns over Fed independence may lead foreign investors to sell dollar assets, particularly in light of President Trump's actions against Fed Governor Cook [2] - The euro (EUR/USD) decreased by -0.30% due to a stronger dollar and fiscal concerns from the German government planning to borrow about 20% more than originally intended in Q4 [4] - Germany's finance agency plans to raise 90.5 billion euros ($107 billion) in Q4, which is 15 billion euros more than previously projected [5]

Core Points - The Federal Reserve announced a quarter percentage point cut to its benchmark interest rate on September 17, marking the beginning of a potential series of reductions aimed at making borrowing more accessible for consumers [1][4] - Fed Chair Jerome Powell described the cut as a "risk-management cut" in response to growing downside risks to employment, acknowledging the challenges posed by inflation remaining above the Fed's 2% target [2][3] - The Fed's updated statement reflects concerns over a weakening labor market, with job gains slowing and no longer being described as "solid" [3] Interest Rate Projections - The Fed's dot plot indicates a median projection of two more rate cuts by the end of the year, although opinions among officials vary widely [4][5] - Seven participants foresee no additional cuts this year, while others project one or two more cuts, with some suggesting aggressive cuts in the coming months [5] Consumer Impact - Economists suggest that the immediate impact of the quarter percentage point cut on borrowing will be negligible, but more noticeable benefits may emerge as the Fed continues to lower rates [8][9] - Auto loans are expected to become more affordable due to the Fed's rate cut, but the actual rates will also depend on longer-term bond yields and individual credit scores [10][11] - Mortgage rates are influenced more by the 10-year Treasury note than by the Fed's fund rate, and significant rate changes would be needed for a substantial impact on the housing sector [12][13][14] Credit Card and Savings Rates - Credit card rates are anticipated to drop slightly, but the overall effect on borrowers will be minimal due to already high average rates [15][16] - Savers will likely see lower returns on savings accounts and certificates of deposit as the Fed reduces interest rates [17]

Group 1: Federal Reserve Actions and Economic Outlook - The FOMC voted 11-1 to cut the federal funds target range by -25 basis points to 4.00%-4.25% and indicated downside risks to employment have increased while inflation remains elevated [3] - The Fed's dot plot projects the fed funds target at 3.625% by the end of 2025, signaling another -50 basis points of rate cuts this year, with a target range of 3.375% for the end of 2026 [3] - The FOMC raised its 2025 US GDP estimate to +1.6% from +1.4% and maintained its core PCE inflation estimate at +3.1%, which is above the Fed's target of 2% [4] Group 2: Labor Market and Inflation Insights - Fed Chair Powell noted that revised job numbers indicate the labor market is no longer solid, and the Fed's interest rate cuts aim to achieve a more neutral position to support the labor market [5] - Powell also mentioned that higher goods prices are contributing to inflation and are expected to continue rising into next year [5] Group 3: Currency Market Reactions - The dollar index rose by +0.22% after recovering from a 3.5-year low, initially retreating after the FOMC's rate cut announcement but rebounding on hawkish comments from Fed Chair Powell [1] - Concerns over Fed independence may undermine the dollar, as potential political actions could lead foreign investors to divest from dollar assets [6] Group 4: Housing Market Data - In August, US housing starts fell -8.5% month-over-month to 1.307 million, below expectations of 1.365 million [2] - Building permits also unexpectedly declined by -3.7% month-over-month to a 5.25-year low of 1.312 million, contrary to expectations of an increase to 1.370 million [2]

Core Viewpoint - The Federal Reserve meeting is ongoing, with Lisa Cook participating despite potential legal challenges, and her views on monetary policy are expected to align closely with Fed Chair Jay Powell's stance on interest rates [1][2][5]. Group 1: Lisa Cook's Role and Perspectives - Lisa Cook is confirmed to be at the Fed meeting, and her historical tendency has been to side with the chair, indicating a dovish approach to monetary policy [1][4]. - It is anticipated that Cook will support a 25 basis point rate cut, reflecting her alignment with Powell's views [5]. - Cook has expressed concerns about the labor market's health, noting a rise in unemployment and a slowdown in hiring, although she has not provided extensive commentary on the subject [6][7]. Group 2: Steven Byron's Influence - Steven Byron's presence at the meeting is viewed as a potential wildcard, with speculation that he may dissent if the Fed opts for a 25 basis point cut, advocating instead for a 50 basis point reduction [8][9]. - Byron's dual role as chairman of the Council of Economic Advisers while participating in the Fed meeting raises questions about his independence and the potential for conflicts of interest [9][10]. Group 3: Independence and Interactions - The independence of Fed members is under scrutiny, particularly regarding the interactions between Fed officials and the White House, especially with Byron's connections to the Trump administration [15][16]. - Historically, Fed chairs have maintained a distance from the executive branch, with limited direct communication with presidents [17]. - Concerns about the revolving door between the Fed and the White House have been highlighted, with examples of past officials transitioning between roles [18].

Joining us now with the latest on trade talks, uh the future of Tik Tok and more, Treasury Secretary Scott Besson. Mr. . Secretary, uh it's good to have you on up.Even I can figure out where you are from that backdrop, Joe. Good to see you. Good to be here in London.And it's good to have you on. So we I I think you got obviously you have an earpiece in. So you heard what was in our headlines.We can Let's just go in order. um and talk about some of the things with uh with Steve Meyer that that we talk about ...