October 4, 2023 | Daily JAM, Morning Briefing |
Private payrolls rose by just 89,000 jobs in September, according to figures published today by the ADP Research Institute. That’s the fewest jobs added in a month since the start of 2021. Private payrolls climbed 180,000 in August. The results trailed all estimates in a Bloomberg survey of economists. The report is more evidence of a further slowing in the labor market. “We are seeing a steepening decline in jobs this month,” Nela Richardson, ADP’s chief economist, said in a statement. “Additionally, we are seeing a steady decline in wages in the past 12 months.” Both trends would be good news for the Federal Reserve in its fight to lower inflation. And would be positives for a financial market which has seen bond yields rise and stock prices stagnate recently in fears that inflation might be staging a come back. Good news–if, that is, the ADP numbers can be believed.
October 3, 2023 | Daily JAM, Mid Term, Morning Briefing |
Where did the slow-moving, deep and placid Treasury market go? The yield on the 10-year benchmark Treasury–you know the one used to set the interest rate on things like mortgages–moved up another 13 basis points today, October 3, to 4.80%. That’s a jump to 24 basis points in just two days. The Treasury market just doesn’t move like this. The yield on the 10-year Treasury is now up 63 basis points in the last month.
October 2, 2023 | Daily JAM, Mid Term, Morning Briefing |
Despite the Wall Street consensus that there won’t be an interest rate increase at the Federal Reserve’s November 1 meeting, Treasury yields keep climbing. The yield on the 10-year Treasury closed at 4.68% today, October 2.
October 1, 2023 | Daily JAM |
The September jobs report is expected to show that the U.S. economy added 168,000 nonfarm payroll jobs in September with the unemployment rate dropping to 3.7%.
October 1, 2023 | Daily JAM, Short Term |
Kicking the shutdown 45 days down the road doesn’t change a single vote in Congress. The question remains exactly what it was before Saturday’s vote–Will McCarthy–or whoever is Speaker–use Democratic votes to pass legislation to fund the operations of the Federal government? Anything that increases the chances the Congress will return to its pre-vote chaos–or worse–will be a negative for financial markets. Anything that points to a full fiscal year budget based on a willingness to use Democratic votes in the House to pass a full fiscal year budget will be a positive for financial markets.
September 29, 2023 | Daily JAM, Morning Briefing |
The Federal Reserve’s preferred measure of inflation, the Personal Consumption Expenditures index (PCE) rose at the slowest monthly pace inAugust since late 2020. The core personal consumption expenditures price index, which strips out food and energy prices, climbed just 0.1% month to month in August, according to the Bureau of Economic Analysis today, Friday, September 29. The so-called super core inflation index for services, which has been on the Fed’s watch list lately, also posted the smallest monthly advance since 2020. The super core rate also strips out housing costs. That rate climbed by just 0.1% in August.
September 23, 2023 | Daily JAM, Short Term |
Expect dueling news watches this week. Garnering most of the pixels will be the countdown to a government shutdown if Congress doesn’t pass a stopgap continuing resolution to keep funding the federal government by September 30. Odds are good right now that the House of Representatives won’t meet the deadline and the many government departments will shut down next week. And on Friday, investors get the next release of the Federal Reserve’s favorite inflation series, the Personal Consumption Expenditures index.
September 21, 2023 | Daily JAM |
In its interest rate policy decisions, the Federal Reserve is trying to figure out how much of past interest rate increases have already worked their way through the economy and how much of a slowdown is still to come. Today’s housing number from the National Association of Realtors doesn’t answer that question, but the data certainly suggests that the slowdown is still slowing down. The number of previously owned homes sold in the United States dropped by 21% percent over the past year
September 20, 2023 | Daily JAM, Morning Briefing |
At today’s meeting the Federal Reserve’s Open Market Committee left the central bank’s policy interest rate at 5.25% to 5.50%. In its Dot Plot forecast the Fed signaled one more interest rate hike for 2023. In its forecast the bank said that rates would end 2023 at 5.6%. That’s roughly 25 basis points higher than today. None of this was surprising. The markets were looking for the Fed to stand pat at this meeting. Odds of that according to the CME FedWatch Tool were above 98% heading into the meeting. The market was calling the possibility of one more interest rate incree in 2023 essentially a coin toss. But the Fed did surprise for 2024.
September 18, 2023 | Daily JAM, Morning Briefing, Short Term |
Here’s my cheat sheet of what to watch for in Wednesday’s Dot Plot revision of the Federal Reserve’s forecasts for the rest of 2023 and 2024. The last revisions before this came at the Fed’s June meeting so there’s reason to think that the Fed will have something market-moving to say about how it sees the economy, interest rates, inflation, and unemployment trending over the next year and a half.
September 13, 2023 | Daily JAM, Mid Term, Morning Briefing |
The theory, for today at least, is that the uptick in CPI inflation for August doesn’t change the basis calculus at the Federal Reserve.
September 6, 2023 | Daily JAM, Morning Briefing, Short Term |
U.S. stocks fell today, Wednesday, on a stronger-than-expected, Purchasing Managers Index (PMI) for the service sector. The reading raised fears that the Federal Reserve, which is generally expected to keep interest rates steady at its September 20 meeting, will not move quickly to reduce rates. The odds of an interest rate INCREASE at the Fed’s November 1 meeting rose to 47.2% on the CME FedWatch Tool from 42% yesterday.
