Fed officials are split over inflation risks and the labor-market outlook after December's rate cut, signaling an uncertain path for policy in 2026. ...

Monetary Policy Outlook - New York Fed President John Williams sees room for another "near-term" rate cut [1] - Employment risks have risen, while inflation risks have eased, supporting the case for a rate cut [1] - Fed officials are split on whether to cut rates again in December [1] Key Decision Factor - The final decision on a December rate cut likely hinges on Chair Jerome Powell [1]

Core Viewpoint - The discussion highlights differing perspectives within the committee regarding future interest rate cuts, emphasizing that a reduction is not guaranteed and depends on various economic indicators and risks [1][4][6]. Group 1: Interest Rate Decisions - The committee has reduced rates by 150 basis points, bringing them into the range of 3% to 4%, which aligns with many estimates of the neutral rate [2]. - There is a division among committee members on whether to pause further cuts or continue, reflecting differing views on economic conditions and risks [4][6]. - Some members advocate for a wait-and-see approach to assess the real impact of stronger economic growth and potential risks to the labor market [3][6]. Group 2: Economic Indicators - The labor market is considered a more reliable indicator of economic momentum compared to spending data, suggesting that its performance will influence future policy decisions [3]. - There are concerns about inflation risks and employment risks, which contribute to the differing philosophies among committee members regarding monetary policy [5][6]. Group 3: Committee Dynamics - The committee is committed to achieving maximum employment and stable prices, but members have varying forecasts and risk tolerances, leading to disparate views on policy actions [6]. - The recent economic projections and public remarks from Federal Open Market Committee (FOMC) participants indicate a growing sentiment for a cautious approach moving forward [7].

Group 1 - The Federal Reserve's recent messaging has created uncertainty among investors, leading to potential volatility in the markets [1][2][3] - The Fed's decision to cut interest rates by 25 basis points was initially met with positive market reactions, but concerns about the labor market quickly dampened investor sentiment [4][6] - Fed Chair Jerome Powell's characterization of the rate cut as a "risk-management cut" has led to mixed feelings among investors regarding lower borrowing costs versus labor market concerns [4][5][6] Group 2 - The Fed's increasing focus on the strength of the U.S. labor market indicates a shift in priorities, with concerns about recessionary dynamics taking precedence [3][5] - The central bank's economic projections have added to the confusion, making it unclear how they will balance risks related to inflation and employment moving forward [7]

Group 1 - The Federal Reserve is expected to cut interest rates by 25 basis points, with further cuts anticipated, which supports risky assets like cryptocurrencies [2][1] - Bitcoin has reached a nearly four-week high as markets speculate on the Fed's potential policy easing [1][2] - The focus is on Fed Chair Jerome Powell's assessment of the labor market slowdown versus inflation risks and economic projections uncertainty [2]

Core Viewpoint - Anticipation is building around the Federal Reserve's likely interest-rate cut next week, with a focus on the behavior of a specific Treasury bond amid inflation risks [1] Group 1 - J.P. Morgan Asset Management's Phil Camporeale is monitoring the Treasury bond's performance as inflation risks persist [1]

Euro Strength & Political Risks - Despite political instability in France and concerns over the Spanish budget, the euro has maintained its strength, trading near 1.20-1.21 levels [1][2] - The euro's resilience contrasts with last year's French political crisis, where the euro weakened significantly against the dollar and pound [3] - The euro's strength is attributed to dollar weakness rather than euro strength, remaining above $0.86 against the pound [4] Dollar Weakness & US Economic Factors - Persistent dollar weakness has been observed over the past five days and throughout the year [5] - Key catalysts for the dollar include expectations of Federal Reserve interest rate cuts, which are largely priced in [6] - Upcoming payrolls data and inflation figures could shift the picture, potentially making the euro and other currencies more vulnerable and impacting the dollar [7] - Macro uncertainty and a likely lower rate environment are expected to support further dollar weakening [8] Gold & Precious Metals Market - Gold has exceeded April records, coinciding with tariff turmoil and dollar weakness [8][9] - A "sell the US story" is emerging, driving movement towards precious metals [9] - Weaker US economic data in the coming weeks could disrupt the precious metals market [10]