South African inflation expectations for the next two years fell in the fourth quarter, edging closer to the central bank’s new 3% inflation target https://t.co/VhW8CvvBgv ...

The dollar index (DXY00) today is down by -0.18%.  The dollar is weaker amid expectations that the Fed will cut the federal funds target range by -25 bp at the conclusion of today's FOMC meeting.  The dollar extended its losses today after the US Q3 employment cost index rose less than expected, a dovish factor for Fed policy. The dollar has recently been undercut by concerns that President Trump intends to appoint a dovish Fed Chair, which would be bearish for the dollar.  Mr. Trump said last that he wil ...

Joining us now is Bob Dah, CEO and CIO at Crossmark Global Global Investments. Bob, great to see you. >> Good to see you, Mike. >> How are you thinking about uh the market economy interplay into this Fed decision? >> Uh look, I think we're in a high risk bull market. Words chosen carefully. Bull market path to least resistance is higher. When the Fed's cutting rates and earnings estimates are going up, stocks almost never go down. That's the bull part. Got to be invested. >> You know what the other side is? ...

UK wage settlements are forecast to remain well above the 3% to 3.5% the BOE deems compatible with its 2% inflation target https://t.co/4FrbJxDUGp ...

Core Insights - The current economic growth, driven by the AI data center boom, is not translating into significant job growth, indicating a potential disconnect between GDP growth and labor market strength [1][3] - The Federal Reserve is expected to continue cutting rates due to a weakening labor market, despite inflation being slightly above their target [4][5] - A K-shaped recovery is observed among consumers and corporations, suggesting that not all sectors are benefiting equally from the economic growth [6] Federal Reserve Expectations - The Fed's plans for rate cuts may be disrupted by labor market weaknesses, which could lead to a more stimulative approach [4][5] - A December rate cut is anticipated, with additional cuts likely in the following year as the labor market continues to weaken [5][6] - The Fed is currently above neutral and may continue to cut rates to avoid being restrictive [7] Fixed Income Market Implications - Weakening labor market conditions and potential Fed rate cuts could lead to favorable returns for fixed income investors, particularly in the front to belly of the yield curve [9][10] - The market is pricing in Fed funds forecasts that are considered too high, suggesting benefits for those taking interest rate risks [10][12] - A diversified portfolio that includes emerging markets and securitized products is recommended to capture higher yields and spread opportunities [13][24] Investment Strategies - Agency mortgage-backed securities and commercial mortgage-backed securities are highlighted as attractive sectors due to their potential for spread compression and benefits from falling interest rates [18][19] - The recently launched Eaton Vance Income Opportunities ETF (XAGG) aims to provide exposure to a barbell approach in fixed income, focusing on sectors that offer higher yields and diversification [20][21] - The ETF targets a weighted average investment grade, ensuring a balanced risk profile while seeking outperformance compared to traditional fixed income investments [22][23] Long-term Outlook - Fixed income returns are expected to be centered around current yields, with a potential for additional returns through strategic interest rate and curve positioning [26][27] - High base treasury yields are seen as a hedge against risk assets, particularly in a balanced portfolio [28][29] - Inflation is projected to stabilize around 2% in the coming year, which would benefit fixed income investors as tariff-related inflation subsides [30]

Group 1 - The monetary policy is focused on balancing downside risks to maximum employment and upside risks to price stability, with increased downside risks to employment as the labor market cools [1] - The Federal Open Market Committee (FOMC) has reduced the target range for the federal funds rate by 25 basis points in its last two meetings to restore inflation to a sustained 2% goal [2] - The current monetary policy is viewed as modestly restrictive, with potential for further adjustments to align the policy stance closer to neutral, maintaining a balance between employment and price stability goals [3] Group 2 - Future policy decisions will be based on the evolution of data, economic outlook, and the balance of risks related to maximum employment and price stability [4]

South Africa’s central bank resumes its easing cycle as it trimmed its inflation forecasts following the formal adoption of a 3% inflation target https://t.co/ciwrj6h4jh ...

Economic Outlook - The global economy is undergoing significant changes due to shifting monetary policies, inflation pressures, and technological advancements, leading to concerns about potential market corrections [1] - There is a distinction between "cockroaches," which represent manageable risks, and "termites," which threaten the integrity of the economic system [2][3] Risks and Concerns - Economic accidents are anticipated due to stretched financial conditions and increased risk-taking by investors, but systemic shocks are not expected [4] - Concerns are rising regarding lower-income households facing significant financial pressure and the need to refinance debt at higher interest rates [6][8] Income Disparity - The wealth generated in the market has not translated to lower-income consumers, who are experiencing affordability issues, leading to potential economic contagion if spending declines [9][10] - The K-shaped economy highlights the disparity between high-income consumers and those at the lower end, with the latter group potentially entering a recession [8][9] Federal Reserve Insights - The next Federal Reserve chair will inherit a divided institution, with differing views on prioritizing employment versus inflation [16][17] - There is a call for the Fed to adopt a more forward-looking approach, particularly regarding the impact of AI on productivity and growth [18][30] AI and Productivity - AI is seen as a potential driver of productivity, but there are concerns about a corporate mindset focused on cost minimization rather than labor enhancement [31][32] - The current investment landscape in AI is characterized as a "rational bubble," with significant opportunities but also risks of losses due to overvaluation [35][38] Policy Recommendations - Policymakers are urged to recognize that future economic outcomes will be determined by the extremes of income distribution rather than a traditional bell curve [39]

South Africa’s finance minister adopts a 3% inflation target, giving political backing to the central bank which lobbied for the change https://t.co/mPblvZSGJS ...

RT Bloomberg Opinion (@opinion)Is the Fed’s inflation target still 2%?If so, the board has a funny way of showing it, @clive_crook explains 🎥 https://t.co/WQl7tZ3lWl ...