February 12, 2025 | Daily JAM |
Bond traders pushed out bets for the next Federal Reserve interest-rate cut to December on today’s increase in the CPI inflation rate. Swap contracts linked to future Fed decisions had before today anticipated a rate cut by September. Today’s swap pricing implies just one quarter-point cut this year. The yield on benchmark 10-year Treasury closed the day up 9 basis points to 4.62%%. Two-year Treasury yields, more sensitive than longer-maturity debt to Fed rate moves, rose by 7 basis points to 4.35%. “How can anyone justify any rate cuts with such inflationary pressure?,” Roger Landucci, a partner at Alphamatrix Finance in Geneva, told Bloomberg.
February 12, 2025 | Daily JAM, Morning Briefing |
CPI inflation rose by more than expected in January, as prices for groceries, housing and energy all picked up. The headline, all-items Consumer Price Index rose by 3.0% in January from a year earlier, the Labor Department reported Wednesday morning. That’s slightly above the 2.9% annual rate reported in December. The core index, which strips out volatile food and energy prices, was also higher, showing a 3.3% annual rate.
February 9, 2025 | Daily JAM |
The Consumer Price Index inflation report, due from the Bureau of Labor Statistics on Wednesday morning, is forecast to show that the core consumer price index, which excludes food and energy prices, rose 0.3% in January for the fifth time in the last six months. Compared with a year earlier, core CPI is forecast to have risen 3.1%
February 7, 2025 | Daily JAM, Morning Briefing |
The U.S. economy added 143,000 jobs in January, a slower but solid pace that was a tick below economist forecasts. The unemployment rate dipped to 4%. The labor market slowed compared to December. That December report was revised Friday to show 307,000 jobs gained that month. Average hourly wage growth accelerated, rising by 4.1% rate over the past 12 months. That wage gain was above the rate of inflation.
February 6, 2025 | AAPL, ACAD, AGN, ALV, AMZN, AUY, BABA, BG, BGC, BHP, BMY, CHK, CMI, CNI, COH, CSCO, CX, Daily JAM, DD, DE, DHR, DXJR, EBAY, ENB, EUM, FB, FCX, FLR, FLS, FTV, GE, GLW, GOOG, HAIN, HDB, INCY, IONS, ITUB, JCI, JO, JOY, KMI, LFL, LNG, LUX, MGM, MIDD, MON, MPC, OGXI, OKS, PEP, PFXF, POT, PXD, QCOM, RSPP, RYN, SDRL, SFTBY, SH, Short Term, SLB, SPWR, Videos, Z-SYMBOLS |
Today’s video is the Fed is between a rock and a hard place. Inflation has been stuck around 2.8% and the Fed would like to get it down to 2%. In January, the Fed paused any movement on interest rates but Wall Street remained hopeful for two cuts in 2025. The March 19 meeting will include a dot plot that will outline whether or not the central bank is thinking about any cuts for 2025. The problem is the Fed doesn’t know where the economy is going. There are too many uncertainties surrounding constantly changing Trump tariffs as well as the expected tax cut bill (which will result in higher yields and a market and economic stimulus). The budget also remains an unanswered question. These uncertainties, with the Fed also under huge political pressure from the Trump administration to make interest rate cuts, catch the Fed between a rock and a hard place and we won’t know how the Fed plans to address its dilemma until March.
January 31, 2025 | Daily JAM, Morning Briefing |
Today’s release of the PCE (Personal Consumption Expenditure) index, the Federal Reserve’s preferred inflation measure, wasn’t good news for investors hoping that the central bank will quickly resume interest rate cuts. The PCE climbed 2.6% in December from a year earlier, faster than its 2.4% annual rate in November and above the central bank’s 2 percent target. Compared to the previous month, prices were up 0.3%.
January 29, 2025 | Daily JAM, Morning Briefing |
The Federal Open Market Committee voted unanimously today to keep the Federal Funds rate unchanged in a range of 4.25%-4.5%, after lowering rates by a full percentage point in the final months of 2024. Federal Reserve Chair Jerome Powell said officials are not in a rush to lower interest rates, adding the central bank is pausing to see further progress on inflation following a string of rate reductions last year.
January 28, 2025 | Daily JAM, Morning Briefing |
We won’t get another update on the probable trajectory of Federal Reserve interest rate policy until the central bank updates its Dot Plot projections at its March 19 meeting. But meanwhile, we have a survey from CNBC that shows a majority of respondents–and this is a small sample of hust 25–still believe we’ll get two interest rate cuts from the Fed in 2025. But that faith in that two-cut scenario is fading.
January 25, 2025 | Daily JAM |
I expect Wednesday’s meeting of the Federal Reserve’s Open Market Committee to be the big event. Not because the Fed will do anything unexpected on interest rates. It won’t change its benchmark policy rate now at 4.25% to 4.50%. But because the Fed might say something that hints on whether and when it might cut interest rates again.
January 24, 2025 | Daily JAM, Morning Briefing |
That was quicker than I expected. On Thursday President Donald Trump used a virtual address at the Davos World Economic Forum to pick a fight with he Federal Reserve and Fed chair Jerome Powell. I wasn’t expecting the President to go after the Fed until Wednesday, January 29–assuming, as now looks just about certain, that the Fed doesn’t cut interest rates at its meeting that day.
January 22, 2025 | Daily JAM |
Assuming that conventional economics still has some validity and that economic history has some predictive value, Paul Krugman, who won his 2008 Nobel-prize in economics for his work on international trading patterns, has put some numbers on the likely effects of the higher tariffs proposed by President Donald Trump. In his Substack (Krugman left the New York Times after 25 years at the end of 2024) he laid out this math.
Imports are about 11% of U.S. GDP. A first-pass estimate would be that tariffs on the scale Trump is threatening would be a 25% sales tax on goods that account for 11% of consumer spending. That would raise the cost of living by almost 3%–well over 3% if, as Trump has said he intends in some speeches, he puts much higher tariffs on imports from China. Since median household income is more than $80k, that’s around $2500 a year for the typical household.
January 15, 2025 | Daily JAM, Morning Briefing |
As of noon New York time today, January 15, the Standard & Poor’s 500 was ahead 1.30%. The NASDAQ Composite and the small-cap Russell 2000 were both up 1.80% on the session. Today’s big moves come on relatively minor changes in inflation trends in this morning’s report on CPI inflation in December. And I think they have more to do with how afraid Wall Street is that the Federal Reserve isn’t going to deliver at least one or two interest rate cuts in 2025 than with any big news in today’s report. The consumer price index (CPI) rose at an annual rate of 2.9% in December, up from a 2.7% annual rate the previous month. That increase was in line with expectations. On a month-to-month basis, the index rose 0.4%. The “core” index, which strips out volatile food and energy prices and is much more important to the Fed than the headline inflation number, rose at a 3.2% annual rate in December. That was down slightly from its annual rate of 3.3% in November, and less than economists had expected. It’s this dip in the annual rate of core inflation that has investors feeling so optimistic today.
