Fed mission almost accomplished as PCE inflation dips to 2.1% rate
The Federal Reserve’s preferred measure of U.S. inflation, the Personal Consumption Expenditures (PCE) price index, fell to a 2.1% annual rate in September.
No consumer slowdown visible as confidence numbers blast through projections
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.
Climb in yield on 2-year Treasury says bond market is rethinking rate-cut trajectory
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
CPI core inflation ticks upward; 25 basis point cut in November now consensus
Today, both the headline and the core CPI, which excludes food and energy, came in 0.1 percentage point higher than forecast for the month, with a month to month 0.2% increase in the headline index and a 0.3% rise for the core.On an annual basis, the headline index rose 2.4% in September, slightly less than the 2.5% in August. The core inflation rate, the more important number to the Federal Reserve, accelerated for the first time in one and a half years, to 3.3% from 3.2%. Weekly initial claims for unemployment also came out today, Thursday, October 10, and showed a much-bigger-than-expected increase of 258,000, against the median forecast for 230,000. Together the two reports almost cemented the odds of a 25 basis point cut in interest rates when the Fed meets on November 7.
A perfect storm? War, oil, hurricanes, earnings, interest rates all worry stocks at once
It’s not surprising that stocks fell Monday, October 7. But it is surprising that they fell so little. The Standard & Poor’s 500 was off 0.96% on the day. The NASDAQ Composite dropped 1.18%. Wall Street’s favorite volatility gauge–the VIX–jumped to “just” a two-month high. Look at the negatives arrayed against stocks
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 large 50 basis point interest rate cut at its November 7 meeting to pricing in doubts that the central bank will deliver even a 25 basis point cut.
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% today on the CME FedWatch tool after a strong jobs report for September showed a tick down in the unemployment rate.
Money-market fund assets rise to record $6.46 trillion–but what does it mean?
Total assets under management in U.S. money-market funds rose by $38.7 billion in the week week ended October 2, according to the latest Investment Company Institute data released on Thursday. The increase puts total assets at a record $6.46 trillion, and caps the biggest quarter of inflows since the March 2023 banking crisis. The old record was set when the collapse of Silicon Valley Bank and other lenders sent a flood of cash into money-market funds as the Federal Reserve raised rates. What’s odd now is that the Federal Reserve is cutting interest rates and the financial system doesn’t seem particularly stressed.
Special Report “10 Trump and 10 Harris winners (and 5 losers)–first 3 Trump picks and first 3 Harris picks
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.
Fed’s favorite inflation measure rose more slowly than expected in August
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.
Investors add 2+2 after Fed rate cut and lower initial claims report–and stocks roar higher
The number of Americans filing new applications for unemployment benefits dropped to a four-month low last week. Initial claims for state unemployment benefits dropped 12,000 to a seasonally adjusted 219,000 for the week ended September 14. That’s the lowest level since the middle of May, the Labor Department said on Thursday. Economists polled by Reuters had forecast 230,000 claims for the latest week. And stocks soared.
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 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.
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