This Week
Markets rose this week, as December rate cut odds continued their rebound to 85+% now from a low 30% last week for a few reasons:
- Fed Governor Waller (again) advocated for a December cut since “most… data [show] the labor market is soft. It’s continuing to weaken.”
- Consumers agree as the Consumer Confidence survey showed fading labor market sentiment (and the worst Confidence since April).
- The Fed’s “Beige Book” of regional activity confirmed that view, showing “employment declined slightly” in November.
- Soft core producer price inflation suggests core PCE inflation could slow in September since CPI and PPI components feed into PCE, easing inflation worries a little.
In a bit of a “bad news is good news” week, the Nasdaq-100® had its best week in over six months, gaining +5% (blue line), and 10-year Treasury yields were down a few bps to about 4.0% (black line).
Next Week
Here are five events I’m watching next week:
- PCE inflation on Friday
- Real consumer spending (PCE) on Friday
- Fed Chair Powell speech on Monday
- Manufacturing PMIs (ISM & S&P) on Monday
- Services PMIs (ISM & S&P) on Wednesday
