- A risk that slow pass-through of tariffs starts to look like persistent inflation.
- The labor market has demonstrated significant downside risk.
- As risk come more into about policy needed to move to being more neutral.
- If Fed moves too quickly in May leave the inflation job unfinished.
- Data since the July meeting shows labor market has softened considerably.
- Will not try to pinpoint breakeven rate of employment. Standard error itself is perhaps 50 K.
- Breakeven rate of job growth has come down a great deal.
- Range of plausible numbers could go to negative given the 50K standard error
- The fact the unemployment rate has barely moved is quite remarkable.
- Research points to longer legs for policy to influence jobs and inflation.
- The Fed will start to miss the data, will become more challenging if shutdown lingers in October data is delayed
- it remains early days to look at the AI impact on productivity.
- Overall data show reserves are still abundant
- the Fed has come through crisis as well or better than any country in the world.
- Consensus is great but more important is to get the right policy decision.
- There is a very healthy debate about policy, given the situation of tension between the mandates.
- Changes to immigration have been stronger than many expected.
The USD is pushing lower with the EURUSD extending above its 100 hour moving average at 1.1590 and also above the 1.1600 level. The 100 hour MA had been finding willing sellers near the level. Breaking above, now sets that MA as support. ON the topside, the 100 day moving average and falling 200-hour moving average near 1.1641 is the next target.
The USDCHF is pushing lower and tests the 200 hour MA and 50% retracement of the range since the August 1 high. That level comes near 0.8000.
