Saturday Night Quarterback says, For the week ahead expect…
Maybe. Must maybe. All eyes will be on the Federal Reserve meeting on December 13.
U.S. economy added stronger than expected 199,000 jobs in November
The U.S. economy added 199,000 jobs in November, the Labor Department reported today, Friday, November 8. The unemployment rate dropped to 3.7% from 3.9% in October That surprised economists who had expected the unemployment rate to hold steady. The bond market reacted in the morning hours after the report was released at 8:30 a.m. New York time by selling Treasuries. The yield on the 10-year Treasury gained 8 basis points to 4.233% as of 10 a.m. in New York as bond prices fell. The yield on the two-year Treasury jumped 78 basis points to 4.669%.
Initial claims, continuing claims for unemployment show a modestly slower jobs market
It’s probably not enough to push the Federal Reserve to cut rates on the schedule that Wall Street is hoping for –with the first cut in March 2024–but it does make a “no increase in interest rates” result from the December 13 Fed meeting even more likely.
Jobs market continues to slow: I’m sure that makes the Fed happy, but how do “real” people feel?
In October job openings in the U.S. economy fell to the lowest level since early 2021. I’m sure that make the Federal Reserve happy ahead of its December 13 meeting on interest rates. The Fed has been looking for sign that the labor market is cooling off. And it’s getting plenty of them recently. (And will probably get more on Thursday and Friday when the government reports new claims for unemployment and the jobs situation for November.) The question, for those few of us who still see a recession in 2024 as a danger, is When is slower too slow? A slowing labor market means fewer gains to average weekly earnings. Which translates into either less consumer spending, or consumer spending fueled by more debt.
Powell tries to temper Wall Street belief in rapid interest rate cuts but no one is listening
It wasn’t the most forceful pushback it’s true, but the financial markets paid attention to Federal Reserve Chair Jerome Powell’s attempt to say interest rate cuts aren’t just around the corner for about two minutes. And then the rally based on a belief in 4 or 5 cuts in 2024, and as early as March (and certainly by May), was off and running again.
Put a fork in it! Interest rates will definitely be on hold at December meeting, the market decides
The Dow Jones Industrial average soared 1.47% today–or 520 points–as the Federal Reserve’s favorite inflation measure showed that inflation continued to fall in October. The inflation news, the market decided, was exceedingly good news for the old economy stocks in the Dow 30. In contrast, the new economy stocks in the NASDAQ Composite fell 0.23% on the day.
Saturday Night Quarterback (on a Sunday) says, For the week ahead expect…
I expect a week heavy with Fed-speak with the Federal Reserve’s pre-meeting quiet period due to start on Saturday, December 2, this week is the central bank’s last chance to shape market sentiment before the December 13 meeting of the Open Market Committee. That’s the Fed body that sets interest rates, just in case you’ve forgotten. The December 13 meeting date also includes the release of the quarterly update of the Fed’s Dot Plot projections on interest rates, inflation, GDP growth, and unemployment for 2024.
It looks like the job market is slowing–although data is inconclusive
Initial claims for unemployment fell by 24,000 to 209,000 in the week ending November 18, the Labor Department said n Wednesday. That was the biggest drop since June. Continuing claims, the number of people continuously receiving unemployment benefits, slipped to 1.84 million in the week ended Nov. 11. That was the first drop in two months.
Nothing new in Fed’s November 1 minutes: Careful on rates
Federal Reserve officials at their November 1 meeting were agreed on a strategy to “proceed carefully” on future interest-rate moves and base any further tightening on progress toward their inflation goal. “All participants agreed that the committee was in a position to proceed carefully and that policy decisions at every meeting would continue to be based on the totality of incoming information,” according to minutes of the November 1 Federal Open Market Committee meeting released today, Tuesday, November 21. At the meeting the Fed held its benchmark lending rate in a range of 5.25% to 5.5% for the second straight meeting.
And now it’s May–market moves up date of first Fed interest rate cut
Until this week, the consensus was that the Federal Reserve would begin to cut interest rates in July (or maybe June.) As of Friday, November 17, however, the CME FedWatch Tool, which calculates the odds of a Fed move from prices in the FedFunds Futures market, put chances of a interest rate cut at the central bank’s May 1 meeting at better than 50%.
New claims for unemployment climb to three-month high
More news this morning pointing to a slowing economy. Initial claims for unemployment for the past week rose 13,000 to 231,000, the Labor Department Reported this morning. That’s the highest weekly figure in three months. And is yet another sign that the economy is cooling. Which would encourage the Federal Reserve to call an end to it interest rate increases and, maybe even, start to cut rates relatively soon. At least that’s how the bond market read the numbers.
Bond market pauses: Are bond prices ahead of themselves? Have yields dropped too far?
Today stocks and bonds both paused to think about yesterday’s huge rally.
Jim’s Stock Alerts
Download Jim’s eBook for Free
