Here's a statement of the obvious: The opinions expressed here are those of the participants, not those of the Mutual Fund Observer. We cannot vouch for the accuracy or appropriateness of any of it, though we do encourage civility and good humor.
Rates: Fed funds held at 4.25-4.50%, bank reserves rate at 4.40% (generous), discount rate at 4.50%. Treasury QT continued -$5 billion/mo, MBS QT at -$35 billion/mo.
Inflation-expectations remain high now but should be headed down longer term. Rate increases cannot be ruled out, but they have very low probability for the next few years. Prospects of tariff-inflation are unclear. GDP growth has been distorted by abnormal imports/exports ahead of tariffs. Oil & gasoline prices have move up on Israel-Iran skirmishes, but those hikes may not stick (or, may). The US is almost self-sufficient in oil & gas, so it's less vulnerable to external disturbances.
Labor market is solid. Wage growth is moderate. The unemployment rate of 4.2% is still near full employment. Both labor supply & demand have deteriorated, but they remain in balance. This may explain why tougher immigration hasn't affected the labor data yet. However, it's harder to find new jobs or replacement jobs.
Housing has additional complexity in that its short- and long- term outlooks are different.
Uncertainties have diminished but remain elevated due to tariffs, trade, immigration & geopolitics. These have caused wider dispersions in the SEPs. However, pay more attention to short-term projections.
Effects of AI may be positive (general prosperity) or negative (deflationary). AI may augment the labor or replace it. But changes would be transformational.
Fed is data dependent but also forward-looking, so he couldn't be tied down to what the past data showed.
Economic data collection is important because good data benefits all - public, businesses, government. It's an investment in the future.
US fiscal policies & big global economic changes aren't within the purview of the Fed, so it will wait & react to those as they come.
New SEPs (summaries of economic projections) were released.
5-yr review of the Fed about policies & communications is almost complete. These reviews have been done since 2012 - they were done annually at one time, but now every 5 yrs. It's not affected by changes in Fed leadership. Fed staffing level has been reduced as the government shrinks overall. Powell declined comment on whether he will stay on as Fed Governor after his term as Chair expires (that may determine whether the new Fed Chair after 05/2026 may be internal or external); he also declined to address President Trump's comments about him in the media.
@Sven, since nobody else really showed up at the parade, a few soldiers could have done that and it's possible we'd never know!
The possibility of stagflation looms on the horizon, and the Fed must remain vigilant. Tariff talk alone has likely damaged the US as an international trade partner, and this summer's batch of economic reports may be telling.
I didn't pay much attention to the parade actually, but I did happen to see one photo of some heavy equipment (either tanks or Armored Patrol Vehicles) moving down the street. The hatches on the top were open and there were three service people standing and looking out from the hatches.
The person in the front hatch was a rather pretty young woman, who was smiling and obviously enjoying the whole thing.
You can't tell me that wasn't a statement by the Army to whoever happened to be watching... say, for instance, a person named Trump.
I didn't pay much attention to the parade actually, but I did happen to see one photo of some heavy equipment (either tanks or Armored Patrol Vehicles) moving down the street. The hatches on the top were open and there were three service people standing and looking out from the hatches.
The person in the front hatch was a rather pretty young woman, who was smiling and obviously enjoying the whole thing.
You can't tell me that wasn't a statement by the Army to whoever happened to be watching... say, for instance, a person named Trump.
I happened to watch the “stupid liar” remark on Bloomberg TV this morning. Bloomberg followed it immediately with a Liz Ann Saunders interview. What a contrast in class and decorum.
Saunders fears that if Powell or some new Trump appointed Fed Chair aggressively pursues rate cuts, the longer end (10+ years out) might actually move higher as it did a year ago. Sure wouldn’t be good news for the housing sector.
Comments
Rates: Fed funds held at 4.25-4.50%, bank reserves rate at 4.40% (generous), discount rate at 4.50%. Treasury QT continued -$5 billion/mo, MBS QT at -$35 billion/mo.
Inflation-expectations remain high now but should be headed down longer term. Rate increases cannot be ruled out, but they have very low probability for the next few years. Prospects of tariff-inflation are unclear. GDP growth has been distorted by abnormal imports/exports ahead of tariffs. Oil & gasoline prices have move up on Israel-Iran skirmishes, but those hikes may not stick (or, may). The US is almost self-sufficient in oil & gas, so it's less vulnerable to external disturbances.
Labor market is solid. Wage growth is moderate. The unemployment rate of 4.2% is still near full employment. Both labor supply & demand have deteriorated, but they remain in balance. This may explain why tougher immigration hasn't affected the labor data yet. However, it's harder to find new jobs or replacement jobs.
Housing has additional complexity in that its short- and long- term outlooks are different.
Uncertainties have diminished but remain elevated due to tariffs, trade, immigration & geopolitics. These have caused wider dispersions in the SEPs. However, pay more attention to short-term projections.
Effects of AI may be positive (general prosperity) or negative (deflationary). AI may augment the labor or replace it. But changes would be transformational.
Fed is data dependent but also forward-looking, so he couldn't be tied down to what the past data showed.
Economic data collection is important because good data benefits all - public, businesses, government. It's an investment in the future.
US fiscal policies & big global economic changes aren't within the purview of the Fed, so it will wait & react to those as they come.
New SEPs (summaries of economic projections) were released.
5-yr review of the Fed about policies & communications is almost complete. These reviews have been done since 2012 - they were done annually at one time, but now every 5 yrs. It's not affected by changes in Fed leadership. Fed staffing level has been reduced as the government shrinks overall. Powell declined comment on whether he will stay on as Fed Governor after his term as Chair expires (that may determine whether the new Fed Chair after 05/2026 may be internal or external); he also declined to address President Trump's comments about him in the media.
https://ybbpersonalfinance.proboards.com/post/2048/thread
I took care of the 'one finger salute' for Mr. Powell at about 10am this morning.
The possibility of stagflation looms on the horizon, and the Fed must remain vigilant. Tariff talk alone has likely damaged the US as an international trade partner, and this summer's batch of economic reports may be telling.
The big crybaby wants his rate cuts NOW.
Stand firm, Mr. Powell. Stand firm.
The person in the front hatch was a rather pretty young woman, who was smiling and obviously enjoying the whole thing.
You can't tell me that wasn't a statement by the Army to whoever happened to be watching... say, for instance, a person named Trump.
Saunders fears that if Powell or some new Trump appointed Fed Chair aggressively pursues rate cuts, the longer end (10+ years out) might actually move higher as it did a year ago. Sure wouldn’t be good news for the housing sector.