The Conference Board’s gauge of confidence jumped 9.5 points to 108.7, the highest level since the start of the year, data released Tuesday showed. The median estimate in a Bloomberg survey of economists called for a reading of 99.5. The month to month increase was the biggest since March 2021.
The week will bring Big Tech earnings reports and more earnings reports. 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 before the meeting–so no Fed speeches.) And, just for good measure, third quarter GDP figures are due Wednesday, October 30, and PCE inflation numbers are scheduled for Thursday, October 31.
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 rate strategist at Deutsche Bank told Bloomberg. “Data has come in pretty strong. The Fed may slow the pace of rate cuts.” We’ve read this story before
Odds on a 50 basis point cut from the Federal Reserve at its November 7 meeting plunged to 0% today on the CME FedWatch tool after a strong jobs report for September showed a tick down in the unemployment rate.
I don’t know which candidate will win the election. Right now the polls are within the margin of error on the national level–and even tighter in the seven battleground states that will likely decide the electionm. But I do know the results on November 5 will move stocks. Some right off the bat even before the results are certified. Ans more significantly as a new administration clarifies its policy views and takes office.The results will move the stock market in general
And they will move individual stocks and sectors in particular.
We’re looking at a huge week of economic data that will support or disturb the current coin-flip odds of a 25-basis-point/50-basis-point cut when the Federal Reserve meets on November 7. Let’s start with the week’s Big Guy, the September jobs numbers due on Friday.
The Fed’s preferred inflation gauge, the Personal Consumption Expenditures (PCE) index, rose at a slower pace than expected on a monthly basis in August. The core PCE, which strips out the cost of food and energy, rose 0.1% from the prior month during August, below Wall Street’s expectations for 0.2% and the 0.2% reading seen in July.
I expect investors and traders to be looking to Friday’s PCE inflation report for confirmation of the Federal Reserve’s 50 basis-point interest rate cut and for evidence that the Fed will cut by 50 points again at its November 7 meeting.
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 plot showed a narrow majority, 10 of 19 Fed officials, favoring at least an additional half-point in rate cuts at Fed’s two remaining 2024 meetings. The Federal Open Market Committee to lower the federal funds rate to a range of 4.75% to 5%, after holding it for more than a year at its highest level in two decades. It was the Fed’s first rate cut in more than four years.
The Federal Reserve will cut its benchmark interest rate at the Wednesday, September 8, meting off 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 meetings. The odds of a rate cut are a solid 100%. But there is high drama about the size of the initial cut to the Fed’s benchmark interest rate, now at a target range of 5.25% to 5.50%.
Today’s employment t 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 Reserve had waited too long to cut interest rates. The median forecast in a Bloomberg survey of forecasters called for 165,000 new jobs win the month. But the employment number, which left the three-month average of new jobs created at the lowest since mid-2020, wasn’t bad enough to convince traders and investors that the Fed would cut interest rates by 50 basis points at its September 18 meeting.
U.S. job openings fell in July to the lowest since the start of 2021 and layoffs rose, according to the Bureau of Labor Statistics Job Openings and Labor Turnover Survey (JOLTS).
