• People were wrong about Waller and Bowman: they weren’t driven by politics

    There’s been a popular narrative throughout the year about Fed’s Waller and Fed’s Bowman. Both of them were apppointed by Trump in his first term and given that they started to call for rate cuts before all the other governors, people started to think that they were led by political reasons.

    In reality, Waller and Bowman were the only ones right about the labour market. Waller in particular has been making very good cases for rate cuts and his forecasts proved to be right. He expected inflation to reach 3% and then dissipate, and he called for rate cuts because he was expecting more weakness in the labour market. Inflation did rise to 3% (although we still don’t know if it’s going to dissipate) and the labour market did weaken more than expected.

    The narrative about the Fed losing independence because of Trump appointments took a big hit yesterday. In fact, the FOMC showed unity since all the voters voted for 25 bps cut and only one voted for 50 bps. The one voting for 50 bps was Miran. Miran was also the only one projecting 6 rate cuts by year-end. Miran was of course driven by political reasons, but since he’s been basically emarginated from the rest, what he does or says in the next months won’t matter at all.

    Going back to Waller and Bowman, they voted for 25 bps despite calling for a rate cut already in July. Since then we got two consecutive soft NFP reports and despite that, they decided to vote for just 25 bps alongside their colleagues. This showed unity and independence. People also forget that Powell was also appointed by Trump and despite that, he kept running monetary policy independently.

    Trump’s attempt to fire Fed’s Cook is also looking like it’s not going to work. We are now even getting reports that the US Treasury Secretary Bessent made similar mortgage claims cited by Trump to fire Cook. So, even if next year we get a lackey as Fed Chair, the FOMC will still be independent as monetary policy is decided on a majority basis.

    This article was written by Giuseppe Dellamotta at investinglive.com.

  • People were wrong about Waller and Bowman: they weren’t driven by politics

    There’s been a popular narrative throughout the year about Fed’s Waller and Fed’s Bowman. Both of them were apppointed by Trump in his first term and given that they started to call for rate cuts before all the other governors, people started to think that they were led by political reasons.

    In reality, Waller and Bowman were the only ones right about the labour market. Waller in particular has been making very good cases for rate cuts and his forecasts proved to be right. He expected inflation to reach 3% and then dissipate, and he called for rate cuts because he was expecting more weakness in the labour market. Inflation did rise to 3% (although we still don’t know if it’s going to dissipate) and the labour market did weaken more than expected.

    The narrative about the Fed losing independence because of Trump appointments took a big hit yesterday. In fact, the FOMC showed unity since all the voters voted for 25 bps cut and only one voted for 50 bps. The one voting for 50 bps was Miran. Miran was also the only one projecting 6 rate cuts by year-end. Miran was of course driven by political reasons, but since he’s been basically emarginated from the rest, what he does or says in the next months won’t matter at all.

    Going back to Waller and Bowman, they voted for 25 bps despite calling for a rate cut already in July. Since then we got two consecutive soft NFP reports and despite that, they decided to vote for just 25 bps alongside their colleagues. This showed unity and independence. People also forget that Powell was also appointed by Trump and despite that, he kept running monetary policy independently.

    Trump’s attempt to fire Fed’s Cook is also looking like it’s not going to work. We are now even getting reports that the US Treasury Secretary Bessent made similar mortgage claims cited by Trump to fire Cook. So, even if next year we get a lackey as Fed Chair, the FOMC will still be independent as monetary policy is decided on a majority basis.

    This article was written by Giuseppe Dellamotta at investinglive.com.

  • US futures continue to ramp higher on the session

    The Fed wasn’t as dovish as market players would’ve hoped but they most certainly didn’t take anything away from the market pricing before the decision yesterday. Traders are holding steadfast in expecting ~45 bps of rate cuts by year-end and as mentioned earlier, the FOMC meeting had a little something for everyone and the onus is on US data to change what has been priced in.

    The dollar was firmer earlier in the day but has given back some of the gains with EUR/USD back up to 1.1825 from around 1.1780 earlier. Meanwhile, gold is also flat at $3,660 currently after having touched a low of $3,634 just a couple of hours ago. The turnaround is being led by equities though, which have been ramping higher ever since Asia trading. S&P 500 futures are now up 0.8% on the day:

    You can see the kind of volatility that we got during the Fed decision and into the US close yesterday. But ever since then, it’s been a steady ramp higher for stocks as investors are taking to the mantra of buy now, worry later. As mentioned above, the onus is on US data to change the market perception and Fed outlook for the month(s) ahead.

    We won’t have to wait too long though. There is the weekly initial jobless claims data coming up later today but the big one will only come on 3 October via the next non-farm payrolls report.

    This article was written by Justin Low at investinglive.com.

  • US futures continue to ramp higher on the session

    The Fed wasn’t as dovish as market players would’ve hoped but they most certainly didn’t take anything away from the market pricing before the decision yesterday. Traders are holding steadfast in expecting ~45 bps of rate cuts by year-end and as mentioned earlier, the FOMC meeting had a little something for everyone and the onus is on US data to change what has been priced in.

    The dollar was firmer earlier in the day but has given back some of the gains with EUR/USD back up to 1.1825 from around 1.1780 earlier. Meanwhile, gold is also flat at $3,660 currently after having touched a low of $3,634 just a couple of hours ago. The turnaround is being led by equities though, which have been ramping higher ever since Asia trading. S&P 500 futures are now up 0.8% on the day:

    You can see the kind of volatility that we got during the Fed decision and into the US close yesterday. But ever since then, it’s been a steady ramp higher for stocks as investors are taking to the mantra of buy now, worry later. As mentioned above, the onus is on US data to change the market perception and Fed outlook for the month(s) ahead.

    We won’t have to wait too long though. There is the weekly initial jobless claims data coming up later today but the big one will only come on 3 October via the next non-farm payrolls report.

    This article was written by Justin Low at investinglive.com.

  • BOE to stay on hold today but keep an eye out on the bank rate vote – BofA

    BofA notes that the BOE is widely expected to keep the bank rate unchanged today at 4.00%. While labour market conditions have softened, there’s no sign of a sharp deterioration just yet. And that reduces any urgency for aggressive easing action. That especially as the July inflation numbers and risks to prices in the medium-term argue against back-to-back rate cuts.

    The firm adds that the central bank should continue to reaffirm a more gradual and careful approach, while emphasising concerns over persistent inflation pressures. As for the more interesting part of the decision today, it could be in the bank rate vote.

    In the vote today, BofA expects it to be at 7-2 with Dhingra and Taylor set to dissent by voting for a rate cut. However, they see a risk of Ramsden joining that camp to skew the vote outcome towards being 6-3. Overall, it’s not going to be much of a difference but it certainly keeps things interesting especially after the split in August that required a second round of voting.

    Given that there was already some hawkish bias in the August meeting, BofA sees that should also translate somewhat to September amid “slightly higher” inflation. And that should reinforce caution by the central bank in communicating their decision today.

    This article was written by Justin Low at investinglive.com.

  • ECB’s de Guindos: Present policy stance is appropriate

    • We must continue having a very prudent approach
    • Environment is quite uncertain
    • Growth in H2 won’t be very different from Q2
    • Risks from fiscal policy are becoming more tangible
    • Growth risks are now much more balanced
    • Valuation of markets are very elevated
    • We have to accept small deviations from the inflation goal

    We already got his views yesterday here and he’s obviously not saying anything new here.

    This article was written by Giuseppe Dellamotta at investinglive.com.

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