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Federal Reserve (Fed) Bank of Cleveland President Beth Hammack said late Thursday that keeping the Fed policy restrictive will help bring inflation down.

The USD/JPY pair slumps to near 153.05 during the early Asian session on Friday. The US Dollar (USD) faces some selling pressure as the US government shutdown extends further, hitting a record with still no solution in sight.

The Canadian Dollar (CAD) continues to hold on the weak side against the US Dollar (USD) on Thursday, finding the brakes enough to slow a near-term one-sided backslide, but not enough to stage a meaningful technical recovery.

Fed’s Musalem sees resilient US economy but flags tariff and deficit risks

Federal Reserve Bank of St. Louis President Alberto Musalem said the US economy has shown notable resilience despite uncertainty but faces ongoing challenges from tariffs, inflation pressures, and large fiscal deficits.

Speaking Thursday, Musalem said the labour market has “softened of late” yet remains close to full employment. He expects growth to slow in the fourth quarter but to rebound next year, saying the economy “should do well” as inflation gradually eases.

He acknowledged that tariffs are currently driving inflation higher, but said their impact would likely fade in 2026. The uncertainty around trade policy, he noted, has weighed on corporate sentiment, though firms closer to consumers have had limited ability to pass on higher costs.

Musalem said he anticipates a continued, gradual cooling in the job market, with some downside risks to employment, while seeing upside risks to inflation. He noted that the Fed’s dual mandate—supporting employment and keeping prices stable—remains “somewhat in tension.”

Despite those challenges, Musalem stressed that long-term inflation expectations remain well anchored, and reiterated the Fed’s commitment to maintaining that stability. He also cautioned that rising government deficits are on an “unsustainable path,” posing longer-term risks to fiscal and price stability.

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Musalem is speaking on the U.S. economy and monetary policy before the Fixed Income Analysts Society.

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Musalem’s remarks reinforce expectations for a cautious Federal Reserve into year-end, with policymakers balancing moderate labour-market cooling against lingering inflation risks. His comments on tariffs and deficits add weight to views that fiscal and trade factors could complicate the 2026 policy outlook.

We heard from Hammack earlier, even less dovish!

• Fed’s Hammack says she’d prefer to have rates on the restrictive side of neutral

This article was written by Eamonn Sheridan at investinglive.com.

Swiss commodity trading firm Gunvor has withdrawn its offer to buy the international assets of Russia’s Lukoil after the US Treasury declared it would “never” approve the deal, branding the company a “Kremlin puppet.”

The Treasury’s post on X cited President Donald Trump’s stance that the war in Ukraine must end immediately, saying Gunvor would not be allowed to profit while “Putin continues the senseless killings.”

Gunvor hit back, describing the accusation as “fundamentally misinformed and false.” The firm said it had long severed links with Russia, noting that its co-founder Gennady Timchenko — a close ally of Vladimir Putin — sold his 43.6% stake in 2014, days before US sanctions following Russia’s annexation of Crimea.

Gunvor stressed that it has “actively distanced itself from Russian trading for more than a decade” and condemned the war in Ukraine. The company had been in talks to acquire Lukoil’s European operations, including refineries in Bulgaria and Romania, a 45% stake in a Dutch fuel-processing plant, and about 2,000 petrol stations.

Lukoil said last week it had accepted Gunvor’s offer, pending US approval before its expected addition to Washington’s sanctions list on November 21. Gunvor’s withdrawal now effectively ends those talks.

This article was written by Eamonn Sheridan at investinglive.com.

EUR/USD recovers some ground on Thursday, post gains of 0.45% after bouncing off daily lows of 1.1486 as the Greenback weakened. A soft jobs data in the US increased speculation for a Fed rate cut at the December meeting. The pair trades at 1.1545 at the time of writing.

Tesla shareholders approved CEO Elon Musk’s historic pay package at the company’s annual shareholders meeting in Austin, Texas.

GTA VI was initially set for a fall 2025 launch but has faced multiple delays.

The Tesla TSLA board has approved Musk’s pay package.

TEsla shareholders approve Elon Musk’s $1 trillion pay package

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Tesla shareholders have decisively approved a new ten-year pay package for CEO Elon Musk, potentially valued at as much as $878 billion. The vote is seen as a strong endorsement of Musk’s ambitious vision to transition the electric vehicle manufacturer into a leader in artificial intelligence and robotics.

Analysts suggest the approval is a positive development for Tesla’s stock, as its valuation is heavily dependent on Musk’s future-focused goals. These include the widespread rollout of self-driving robotaxis and the development of humanoid robots, despite recent brand damage from Musk’s political commentary.

The approval was widely anticipated, particularly after the company relocated its incorporation from Delaware to Texas. This move allowed Musk to exercise the full voting power of his approximately 15% stake, helping to secure the win despite significant opposition from major investors, including Norway’s sovereign wealth fund. Tesla’s board had cautioned that Musk might step down if the package was rejected.

The board and supporting investors argue the plan ultimately benefits shareholders. It is designed to secure Musk’s long-term focus, which some feared was diluted by his work at SpaceX, xAI, and in politics.

The compensation is entirely performance-based, tied to a series of challenging milestones. To be paid, Musk must lead Tesla to deliver 20 million vehicles, operate 1 million robotaxis, and sell 1 million robots. Critically, Tesla’s stock value must also rise significantly, climbing from its current $1.5 trillion valuation to $2 trillion and eventually reaching $8.5 trillion.

This article was written by Eamonn Sheridan at investinglive.com.

• US equity close: Signs of second thoughts in the AI investment boom
• Reeves has plans to raise personal taxes – report
• OpenAI CFO highligths the precarious economics of hyperscalers
• Mexico central bank lowers key rate by 25 bps, as expected
• Nikkei: Discrepancies have emerged over the details of China’s agreement on rare earth
• Fed Miran. I expect we will cut in December. I want to get to neutral in 50 bp increments
• More from Fed’s Hammack: Now is challenging time for monetary policy making
• More from Fed’s Williams; People don’t like high inflation.
• Fed’s Hammack: Fed policy should stay modestly restrictive to lower inflation
• Fed’s Barr: Progress has been made on inflation, but there is still work to do
• Fed Williams: The natural rate of interest is hard to pin down
• Speaker Johnson says he is less optimistic about the government shutdown ending
• Goldman Sachs expects the Bank of England to cut rates by 25 basis points in December
• Canada Ivey PMI 51.7 vs 59.8 prior
• US FAA working on details of flight cuts starting tomorrow
• Fed’s Goolsbee: I may be reluctant to continue the rate cutting cycle
• The BOE announced a dovish unchanged (5-4 vote to cut). The USD is lower vs. the majors.
• investingLive European markets wrap: BOE keeps bank rate on hold in tight vote decision
• BOE governor Bailey: We will have opportunity to consider the budget in the next meeting
• BOE governor Bailey: We are likely to continue gradual downward path on the bank rate
• BOE leaves bank rate unchanged at 4.00% in November monetary policy meeting
• US October Challenger layoffs 153.074k vs 54.064k prior

Stocks took it on the chin for the 2nd time this week.

Recall that on Tuesday, the S&P index fell by -1.17%, rebounded by 0.37% on Tuesday, but declined by another -1.02% today.

For the tech heavy NASDAQ index, it fell by 2.04% on Tuesday rebounded by 0.65% yesterday but fell another -1.76% today.

Some big losers today included Palantir which is now down -15.51% since announcing earnings earlier this week. Meta fell another -2.67% and is now down -17.78% since it’s earnings last week. Nvidia fellows 3.65% and is down -11% from Monday’s high. AMD shares fell -7.27% today.

Things could have been worse.

• Celsius −26.57%

• DoorDash −17.48%

• Robinhood Markets −10.81%

• Tapestry −9.54%

• SoFi Technologies −9.49%

U.S. employers announced 153,074 job cuts in October, marking a sharp rise from a year earlier and bringing total layoffs for 2025 to more than one million. The surge was driven largely by cost-cutting measures, automation initiatives tied to artificial intelligence, and a slowdown in demand across several sectors. Companies are continuing to adjust payrolls to preserve margins amid higher financing costs and economic uncertainty. The report reflects growing caution in the labor market, with layoff levels approaching those typically seen in the early stages of economic downturns.

Fed commentary – apart from the Fed dove Miran – was more worrisome on inflation.

First for the dove Miran:

• Fed’s Miran, viewed as one of the more dovish policymakers, said she expects a rate cut in December and favors moving toward a neutral policy stance in 50-basis-point increments, while noting that many of her colleagues prefer smaller, 25-basis-point steps. She added that the Fed doesn’t need to deliver a larger 75-basis-point cut or rush to make up for lost ground, emphasizing a steady, measured pace of easing. Miran described the labor market deterioration as gradual, not accelerating, suggesting there is still room to lower rates without immediate risk to employment.

The other Fed officials were not has dovish:

• Fed’s Hammack said monetary policy should remain modestly restrictive, noting that inflation is likely to stay about one percentage point above target and could take two to three years to return to 2%. She called this a challenging time for policy, emphasizing that inflation risks outweigh labor-market concerns and that it’s not obvious the Fed should cut again. Hammack described the economy as robust and healthy, with strength driven by higher-income consumers, but warned of a bifurcated economy and structural forces like the AI boom that complicate policy decisions. Her overall tone was cautious and hawkish, signaling little urgency to ease.
• Fed’s Barr said that while progress has been made on inflation, there is still work to do to bring it fully back to target. She described a two-speed economy, with wealthier households thriving while many others struggle to save and remain more vulnerable to economic shocks. Barr noted a big gap between the upper 40% of earners and everyone else, highlighting growing inequality in economic outcomes. She said the Fed must remain attentive to keeping the job market solid, and suggested that the current low-hiring, low-firing environment may partly reflect the early effects of AI adoption in certain sectors. Her remarks conveyed a balanced but cautious tone, emphasizing both inflation vigilance and inclusive labor-market strength.
• Fed’s Williams said the natural rate of interest is difficult to pin down, with model estimates placing the neutral rate near 1%, and emphasized the importance of staying aware of the effective lower bound when setting policy. He reaffirmed the Fed’s commitment to fighting inflation, saying it’s vital to bring inflation back to 2% as soon as possible, calling that target a well-balanced compromise that supports stability and public confidence. He also pointed to the AI investment boom as a factor influencing global demand for capital and as the next major driver of productivity growth, though it could create labor-market challenges along the way. Overall, his remarks were measured but focused on inflation control and policy discipline, showing a slightly hawkish bias.
• Fed’s Goolsbee said he is reluctant to continue the rate-cutting cycle, citing uncertainty around inflation data and a labor market that remains largely stable. He noted that most indicators show only mild cooling, with unemployment little changed and current conditions reflecting uncertainty rather than recession. Goolsbee highlighted that consumer spending and growth remain strong but cautioned against easing further while services inflation is still rising and inflation data remain limited. He described himself as not hawkish but cautious, emphasizing a measured, data-driven approach, saying, “when it’s foggy, let’s be careful and slow down,” and adding that while the eventual neutral rate will likely be below current levels, now is not the time to accelerate cuts.

At the start of the NA, the Bank of England held its Bank Rate at 4.00% in a tight 5–4 vote, with Breeden, Ramsden, Dhingra, and Taylor favoring a 25 bps rate cut. The Committee noted that CPI inflation has peaked and that underlying disinflation is progressing, supported by a still restrictive policy stance. However, the balance of risks has shifted, with less concern about persistent inflation and greater attention to weaker demand pressures. The BOE said that as rates begin to fall, the degree of restrictiveness will lessen, and any further reductions will depend on how inflation evolves. Most members acknowledged that domestic inflationary pressures may be easing faster than expected, though Greene, Lombardelli, Mann, and Pill argued for maintaining tight policy due to risks of inflation persistence. Governor Bailey described the outlook as more balanced but preferred to wait for further evidence before cutting. The dissenters viewed policy as overly restrictive and warned that elevated household savings could curb consumption. With the vote finely split and Bailey pivotal, the groundwork for a December cut is in place, though the autumn budget could heavily influence the BOE’s next move. Despite the more dovish stance, the GBP rose by 0.67% vs the greenback.

Overall, the dollar was mixed with the greenback falling vs the EUR (-0.47%), JPY (-0.67%), GBP (-0.65%) and the CHF (-0.51%), but rising vs the commodity currencies with risk off sentiment. The USD was higher vs the CAD (0.07%), the AUD (0.40%) and the NZD (0.51%).

IN the US debt market, yields fell with the 10 year falling by 7 bps to 4.087%. The 2 year fell by -7.3 basis points to 3.559% and the 30 year fell by -5.7 basis points to 4.679%.

The US government shutdown continues with the airports Transportation Secretary Sean Duffy saying that traffic at 40 major airports would be reduced by as much as 10% as a safety measure. Air-traffic controllers and airport security agents aren’t being paid in the shutdown, which federal officials said has led to stretched staffing, flight delays and long security lines. IN Houston there were reports of TSA lines of 3 hours..

This article was written by Greg Michalowski at investinglive.com.