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50. Sans Bowman
They went big.
Two months of high drama crescendoed Wednesday in a 50bps rate cut from Jerome Powell's Fed, which deliberated this week against the deafening din of frenzied investor speculation.
This time last week, markets had all but thrown in the towel on a half-point move after inflation data covering August came in warmer than expected thanks, as ever, to onerous shelter costs. But a series of mainstream media communications from journalists known for tipping the Fed's hand, as well as o
It’s a boy!
This actually made me laugh. Well done T-Dog.
I agree with Karen Finerman’s comment on CNBC yesterday: Powell and the committee had already achieved the mythical soft landing. The .50bps cut — and future timely, data-dependent cuts — is designed to extend it into 2025 (and, hopefully, beyond).
Got the notification for this note and clicked over to see how the market was digesting the news. S&P 500 is up 0.018%. I would say that counts as digesting the news pretty well. Looks like things were priced to perfection.
That said, looking at the intraday chart, things shot up, then during the press conference, shot right back down to flat. So it seems like Powell actually handled the presser well too. Not too shabby mister Jay.
As usual with any kind of intra-day commentary, this comment is aging. It looks like things will sell off into the close, but still, things have been exceptionally orderly all things considered.
That seemed like a pretty relaxed presser. Data dependence continues, essentially. Powell trying to keep all options open, clearly going to react faster to more employment weakness than to, lets say, housing inflation staying high. If labor data shades negative, I’d think market will wail “50 bp for Thanksgiving!” even though Powell pushed back. 10Y yield up.
I don’t know. It’s pretty clear to me after today that November is a hard skip if the NFP headlines hold up and the unemployment rate ticks back lower, or a definite 25 if not, which is to say I don’t think they’ve pre-judged November at all. I think it’s almost purely data dependent. I mean you’ve got nine dots not on board with 100bps for the year and you’ve got a governor dissent. I think 50 in November is a higher bar than folks realize.
I imagine Powell would prefer to not supersize Nov for various reasons. I’m just imagining how hard the market will try to force his hand if the labor data provides any ammunition.
I wouldn’t have noticed if you hadn’t commented (I’m not that plugged in), but bear steepening! That’s interesting. That suggests (to me) signs of increased optimism around a soft landing. Your thoughts John?
I don’t know what it indicates.
When I think of what logically “should” impact long yields, it’s mostly future inflation, growth, demand/supply, and uncertainty.
The biggest near-term factor I can think of is the election. Trump’s plans seem overly inflationary, and I see analysts and economists increasingly saying that. I just struggle to see past that. Probably being myopic.
I am adding your call on 50 vs. 25 to the growing list of “Calls that H got correct”.