Daily update
Daily update
- The Federal Reserve performed as expected—a quarter point rate cut and signals of more to come. The weakening US labor market is prioritized over ongoing inflation increases. That suggests rate cuts even as goods price inflation increases further into next year. Poor quality labor market data presents challenges to policy confidence.
- The fabled dot plot projections of Fed members’ expectations are anonymous. We may never know the identity of the one Fed member who sees rates ending 2025 below 3%. That flamboyant projection, if economic-based, suggests a dire view of the current state and likely path of the US economy—and an astonishing collapse from last year’s soft landing. It is not a view I share. The strength of middle-income consumers in late 2024 should guard against so dystopian a view of the US.
- The Bank of England is not expected to move. There may be dissent, but year to date the UK economy has had the strongest growth in the G7, and one of the best performing bond markets in Europe—although inflation peculiarities do haunt policy.
- US initial and continuing jobless claims data are due, and have assumed more importance for markets. The Philly Fed sentiment poll has less importance, if possible.