The Fed faces an impossible task in 2025
There’s no reason to believe that President-elect Donald Trump isn’t serious about pushing three of his biggest policy ideas through in the first 100 days of his administration in 2025. Susie Wiles, his pick for White House chief of staff, has said, “Get it done in...
CPI inflation creeps higher in October; market still forecasts December interest rate cut
Inflation ticked up slightly on an annual basis in October, the latest evidence that further reductions in inflation are getting hard to achieve. The Consumer Price Index climbed 2.6% from a year earlier, up from September’s 2.4% annual rate, the Bureau of Labor...
Wall Street and the bond market see fewer interest rate cuts in 2025 from the Fed
Look out for more volatility in the bond market. BlackRock, JPMorgan Chase, and TCW Group have all warned that the bumpy ride is likely far from over. But also expect that the big overall trend for 2024 of rising bond prices and falling yields on hopes for aggressive...
Fed sticks with a 25 basis point interest rate cut; but uncertainty seems to be a rising worry
The Federal Reserve lowered interest rates on Thursday by a quarter of a percentage point. The cut was the second this year, following on a larger than usual 50 basis point cut in September. The size of this cut was expected by the financial markets. Wall Street is...
It’s a BIG week for BIG TECH earnings reports
Expect Big Tech earnings reports and more earnings reports this week.. All capped on Friday with the October jobs report, the last one before the November 7 meeting of the Federal Reserve on interest rates. (Which means that the Fed will be in its blackout period...
Climb in yield on 2-year Treasury says bond market is rethinking rate-cut trajectory
As of Monday, October 21, Two-year Treasury yields have climbed 34 basis points since the Federal Reserve reduced interest rates on September 18 for the first time since 2020. Rising yields “reflect the reduced probability of recession risks,” Steven Zeng, an interest...
Retail sales stronger than expected in September
U.S. retail sales strengthened in September by more than forecast. The U.S. economy continues to show solid growth. And the economic strength continues to say that there’s less need for the Federal Reserve to cut interest rates by a larger-than-usual 50 basis points...
Wait! No soft landing! No more rate cuts! The market freaks out again!
It’s back! Fear that the economy is so strong that the Federal Reserve won’t cut interest rates as sharply or as quickly as expected. In the last few days, following on a surprisingly strong September jobs report, the market has gone from giving 50/50 odds to a second...
Strong September jobs report lowers expectations for 50 basis point cut from the Fed
Odds on a 50 basis point cut from the Federal Reserve at its November 7 meeting plunged to 0% Friday on the CME FedWatch tool after a strong jobs report for September showed a tick down in the unemployment rate. On September 27, the CME FedWatch tool, which calculates...
The Fed cuts by 50 basis points–don’t make too much of the dip in stocks today
The Federal Reserve lowered its benchmark interest rate by 50 basis points Wednesday. The vote for a 50 basis point cut was 11-1 with the only negative vote–for a 25 basis point cut rather than 50–the first dissent in the Jerome Powell era. The Fed’s Dot...
All the drama is about the size of the Fed interest rate cut
I expect the Federal Reserve to cut its benchmark interest rate at the Wednesday, September 18, meting of its Open Market Committee. It will be the first in a series of cuts that is likely to include 3 cuts in 2024 (at the September, November and December Fed...
Jobs number weak enough to raise fears for the economy but not weak enough to cement 50 basis point cut on September 18
Today’s employment report from the Bureau of Labor Statistics was the worst of both worlds. The increase in jobs of just 142,000 in August, coupled with downward revisions from June and July was enough to raise fears that the economy is stalling. And that the Federal...
Big downward revision in jobs locks in September interest rate cut by the Fed, puts November cut in play
Monthly employment reports overstated the number of job created by the U.S. economy by 818,000 in the 12 months that ended in March 2024, the Labor Department reported on Wednesday, August 21. That revision, part of the annual process that reconciles job reports...
CPI inflation report this week is one last barrier to September interest rate cut
Expect a final inflation test this week before the Federal Reserve meets on September 18. Unless there’s a huge surprise in the Wednesday, August 14, CPI report, the Fed will cut interest rates for the first time at that meeting. The Federal Reserve Bank of...
Japan taketh away and Japan giveth–today’s rally in Tokyo wipes out most of yesterday’s loss
oday, Tuesday August 6, the Nikkei 225 index closed up 10.23% in Tokyo. That erased most of Monday’s 12% loss. And it led to the U.S. futures market opening higher and U.S. stock indexes moving up today. At the close in New York, the Standard & Poor’s 500 was...
Could the stock correction be all about Japan? And close to an end?
Okay, the correction in the NASDAQ and the near correction in the Standard & Poor’s 500 isn’t all about Japan. U.S. stock valuations are stretched. Air is coming out of the AI bubble. The U.S. economy is slowing But to me those factors don’t explain the stunning...
August is making the stock correction scarier: Is the cure September?
August. Yeah, I know you can read a calendar, but take a moment to think about how the extraordinary August economic news vacuum feeds into the current market plunge. It’s a good environment for downside volatility. No Federal Reserve meeting in August so no interest...
September it is: Fed signals September interest rate cut
At Wednesday’s meeting the Federal Reserve left its benchmark interest rate unchanged at 5.25% to 5.50%. Fed Chair Jerome Powell said an interest-rate cut could come as soon as September. “The question will be whether the totality of the data, the evolving outlook,...
It’s getting to look a lot like September–for the Fed’s first interest rate cut
The U.S. economy added 206,000 jobs in June, the Bureau of Labor Statistics reported today, July 5. That was above the median forecast of 190,000 new jobs in a Bloomberg survey of economists. But even though the June number came in above expectations, the overall...
So much for that job market slowdown in May
Employers added 272,000 jobs in May, the Bureau of Labor Statistics reported this morning. That number was well above the 185,000n projected by economists and even higher above the 175,000 in the April report. The financial markets were disappointed with the news...
And now they tell us: A day before the jobs report the BLS tells us that the employment numbers have been wrong
The Federal Reserve has been telling us over and over again that its decision on cutting interest rates depends on the data. Among other things, the Fed wants to see a steady slowdown in the employment market reflected in the data before it cuts interest rates. But...
Powell says Slow–as market waits for Wednesday CPI inflation report
Granted that the remarks weren’t delivered at the most high profile venue–a panel discussion at the Foreign Bankers Association meeting in Amsterdam–but I read Federal Reserve chairmen Jerome Powell as saying that the U.S.central bank might hold interest...
This coming week the action in the markets is beneath the surface
This week I expect surface quiet but important movement in the lower depths of the financial markets. The week ahead lacks in obvious market-moving events and reports. There’s a smattering of earnings with Disney (DIS) on May 7 and Toyota Motor (TM) on May 8. But...
The jobs data doesn’t tell us what the Fed is thinking about rates and inflation–so the market guesses
The U.S. economy added 175,000 jobs in April, the Bureau of Labor Statistics announced on Friday. That was the smallest number monthly new jobs in six months. The unemployment rate ticked up to 3.9%. And traders tried once again, to get ahead of the data. Concluding...
The Fed walks a very, very fine line on inflation and interest rate cuts
On Wednesday, May 1, the Federal Reserve decided NOT to cut interest rates at its May 1 meeting. That was the decision expected by the financial markets. And Federal Reserve chair Jerome Powell tried his best to keep traders from speculating that the Fed would...
Now it’s one interest rate cut and not until December
How views on interest rates have changed since the start of 2024. Then, in January, the consensus view called for as many as six interest rate cuts from the Federal Reserve in 2024 for a total of 150 basis points in cuts to the Fed’s benchmark interest rate. Today,...Producer price index continues bond market freak out
So why was this so important today? So important that the yield on the 10-year Treasury rose another 3 basis points to 4.58%. The Producer Price Index for final demand rose 0.2% in March, seasonally adjusted, the Bureau of Labor Statistics reported today. Final demand...
Hot CPI inflation number takes June interest rate cut off the table
In March the Consumer Price Index inflation rate rose more than expected by economists for a third straight month, the Bureau of Labor Statistics reported this morning. That looks to the market today, and to me, like it takes an initial interest rate cut off the table...Stronger than expected March jobs report nudges odds against June rate cut slightly
The U.S. economy added 303,000 jobs last month. That was far more than than the 192,000 expected by economists.The unemployment rate dipped to 3.8%. For today at least the stock market sees the report as “The glass is half full.” Yes, a stronger than expected labor...Jim’s Daily Email Alerts:
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