Fed

Is the Fed Inflating? Is China Deflating?

Dec 16, 2024 3 min read paid

Last Thursday, we wrote, "After today's PPI, we won't be surprised if Fed officials plant a story in The Wall Street Journal over the weekend titled something like "Fed Officials Might Vote To Pause Rate Cutting Following Hot Inflation Data." We were close. Nick Timiraos, the WSJ's ace Fed watcher, posted after midnight today an article titled "The Fed’s

Ed Yardeni

Will Rate Cuts Continue Unless Inflation Behaves Badly?

Dec 11, 2024 4 min read

Today's CPI report for November matched expectations. The CME FedWatch tool shows 95% odds that the FOMC will cut the federal funds rate (FFR) by 25bps next week, and the Fed doesn't like to surprise market expectations. The Nasdaq front-ran our forecast to reach 20,000 by mid-2025 by reaching that milestone today (chart). Now we are aiming for 22,000 by mid-2025. Our yearend target

Ed Yardeni
Eric Wallerstein

US Jobs Market: Onwards & Upwards

Dec 3, 2024 2 min read paid

We've contended all year that the labor market was normalizing from the unsustainable pace of hiring during the pandemic. We disagreed with the view that it was weakening. Now we are turning more upbeat about the outlook for employment. Our bet is that the animal spirits unleased by Trump 2.0 will soon be reflected in more job openings and a faster pace of hiring. Today's

Ed Yardeni
Eric Wallerstein

MARKET CALL: Powell's Latest Pirouette

Nov 17, 2024 3 min read

Fed Chair Jerome Powell is an accomplished danseur. His pirouette's are masterful. He did another such pivot on Friday in prepared remarks for a speech [starts at 19:00] to business leaders in Dallas. He said that, "the economy is not sending any signals that we need to be in a hurry to lower rates." That's what we've been saying since Powell

Ed Yardeni
Eric Wallerstein

Sticky Landing For Inflation?

Nov 13, 2024 3 min read paid

Today's CPI report suggests that inflation may be getting stuck north of the Fed's 2.0% target. The headline and core CPI inflation rates rose 2.6% and 3.3% y/y during October. Goods prices are still deflating. But supercore inflation, rent inflation, and wage growth all rose last month suggesting they are getting sticky at relatively high rates. This along with strong economic growth

Ed Yardeni
Eric Wallerstein

Powell's Mixed Message Remains Dovish

Nov 7, 2024 3 min read

The Federal Open Market Committee (FOMC) cut the federal funds rate (FFR) by 25bps today as widely expected. We expected it as well, though we still believe that the now 75bps cut in the FFR since September 18 is too much, too soon because both the economy and the labor market remain strong. In his press conference today, Fed Chair Jerome Powell acknowledged several times that both remain solid. He

Ed Yardeni
Eric Wallerstein

Powell Is Too Dovish

Oct 10, 2024 3 min read paid

The monetary policy hawks may be coming home to roost at the Fed's November 6-7 meeting. September's CPI was hotter-than-expected, thanks to sticky services inflation. Meanwhile, Fed Chair Jerome Powell and the other doves on the Federal Open Market Committee who worried about a weakening economy have less credibility since Friday's jobs report showed the unemployment rate fell further and payrolls reached a new

Ed Yardeni
Eric Wallerstein

Market Call: Back To Higher For Longer?

Oct 6, 2024 2 min read

Remember the "higher for longer" mantra about the outlook for the federal funds rate (FFR) during the spring? It turned into "lower and sooner" this summer in response to the economy's soft patch. After Friday's strong employment report, the consensus might pivot to "no rush to ease further" during the fall. We can't rule out "higher for

Ed Yardeni
Eric Wallerstein

Big Employment Increase Puts Recession Story to Bed

Oct 4, 2024 3 min read paid

This morning's payroll employment report for September and upward revisions for July and August were much stronger than the consensus expected. We weren't surprised. They should bury the looming recession scenario. Stock futures immediately surged, the 10-year Treasury yield rose 10bps to 3.95%, and the dollar moved higher. As we previously observed, the Fed's 50bps cut in the federal funds rate on September

Ed Yardeni
Eric Wallerstein

Powell Declares Mission Accomplished

Sep 18, 2024 3 min read

The Fed cut the federal funds rate (FFR) by 50bps today. This marks the end of the Fed’s monetary policy tightening cycle that started during March 2022, which was aimed at bringing inflation back down to 2.0% even if that caused a recession. Inflation isn't quite there yet, but it is close enough. So today, in his presser, Fed Chair Jerome Powell reiterated that the Fed&

Ed Yardeni
Eric Wallerstein

The Economic Week Ahead: September 16-20

Sep 15, 2024 3 min read paid

The main event this week is the FOMC meeting (Wed). The Fed is widely expected to cut the federal funds rate (FFR), but with a heated debate over whether it will be 25bps or 50bps. Perhaps more important than the size of the first cut will be the Summary of Economic Projections (SEP), which will provide Fed officials' updated forecasts for real GDP growth, the unemployment rate, inflation, and

Ed Yardeni
Eric Wallerstein

CPI Triggered Stock Market Hissy Fit

Sep 11, 2024 3 min read

This morning's CPI report showed inflation continues to moderate. Nevertheless, stock prices initially fell sharply on the news. While the headline CPI was up 0.2% m/m as expected, the core rose 0.3% instead of the expected 0.2%. That minor difference convinced lots of traders that the Fed would cut the federal funds rate (FFR) by 25bps rather than 50bps on September 18. Nevertheless, the

Ed Yardeni
Eric Wallerstein

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