4 min readAI Concerns Reshape Rate Expectations The September rise in Treasury yields pulled back in October. A flight-to-quality bid emerged amid growing concerns about the sustainability of AI-related capital expenditures and a repricing of expectations for future Fed rate increases. This occurred despite higher-than-expected inflation readings and rising oil prices, suggesting that concerns about the potential…
4 min readFed Holds, Markets Expect Hike in December As expected, the Federal Reserve left the federal funds target range unchanged at 3.75%–4.00%. The Committee upgraded its assessment of economic activity from “solid” to “strong,” while reiterating that “domestic spending has been resilient.” At the same time, it acknowledged that “inflation remains elevated,” underscoring the continued challenge…
5 min readSeptember CPI: Price Pressures Persist The September CPI report, released October 14th, showed higher prices across most major categories. Headline CPI rose 0.6%, in line with expectations, driven largely by higher energy prices. Core CPI increased 0.3%, matching August’s reading but exceeding expectations of 0.2%. On an unrounded basis, core CPI rose 0.335%, coming close…
2 min readA Slowing, but Stable Labor Market The September employment report showed slower-than-expected job growth, with nonfarm payrolls increasing by just 29,000 versus expectations of 90,000. In addition, the prior two months were revised down by a combined 60,000 jobs, including a notable revision to July, which was revised from a gain of 21,000 to a…
4 min readFed President Williams: “No need for urgency” Comments from several FOMC members have remained hawkish, but it was recent remarks from New York Fed President John Williams that prompted a meaningful repricing in rate expectations. In a September 29th speech, Williams said, “If the economy evolves in a manner broadly consistent with my forecast, one…
4 min readCore CPI Strengthens Case for Rate Hike The August Consumer Price Index (CPI) came in above expectations at the core level, providing additional support for a potential Federal Reserve rate hike at its September 16 meeting. Core CPI is a key inflation gauge for both markets and the Fed, and the release was particularly important…
8 min readKey Takeaways Introduction One of the biggest concerns for investors right now may be the rise in interest rates. The sell-off in long-term bonds dates back to 2021, but the recent reacceleration is catching market participants’ eye given the economic backdrop: For investors, the implications may extend beyond the bond market. Higher long-term rates can…
6 min readWarsh Signals Hawkish Bias At the Jackson Hole Symposium, Fed Chair Kevin Warsh reiterated themes from his recent FOMC press conferences, emphasizing that inflation remains the Fed’s primary focus. He also used the speech to clarify several issues raised at the July FOMC meeting that had generated questions among market participants, addressing them directly and…
4 min readSofter Data Makes a Fed Rate Hike Less Urgent Economic data released this month increasingly supports the Fed remaining on hold, with weaker labor market and consumer spending data accompanied by a second consecutive month of relatively benign inflation readings: Fed Funds Futures Pare Back Rate Hike Expectations As of August 14th, the Fed funds futures…
5 min readFOMC Update: Warsh Signals Patience At its July meeting, the Federal Open Market Committee (FOMC) voted 9-3 to leave the federal funds rate unchanged at 3.50% to 3.75%. The three dissenting members—Dallas Fed President Lorie Logan, Cleveland Fed President Beth Hammack, and Minneapolis Fed President Neel Kashkari—favored raising rates by 25 basis points. The official…