Uddrag fra Authers:
Change in monetary policy can never be a done deal a month in advance. That said, a rate cut at the next Federal Open Market Committee meeting now does indeed look a done deal. New shreds of supporting evidence include a revision to the non-farm payrolls data announced chaotically by the Bureau of Labor Statistics, which found that earlier estimates may have overstated employment by some 810,000 jobs; and from the minutes of the last FOMC meeting in July. They were about as clear-cut as a central bank can ever be:
The vast majority observed that, if the data continued to come in about as expected, it would likely be appropriate to ease policy at the next meeting.
Further, “several observed that the recent progress on inflation and increases in the unemployment rate had provided a plausible case for reducing the target range 25 basis points at this [July] meeting” or that at least they could have supported such a decision.
Since July, as we all know, incoming data have strengthened the case for a rate cut, while the latest big revision to payrolls — which were unsurprisingly inaccurate given how much response rates to the government survey have dropped — suggests that the data supported a big cut all along. What’s most interesting about Wednesday’s news, however, is the lack of much reaction to it.
The fed funds futures market is back to fully pricing in four cuts by the end of this year, which would imply that at least one of the next three meetings will need to ease 50 basis points. But that’s still a bit more conservative than in the immediate aftermath of the poor payrolls data, which appeared Aug. 2:
Bond yields declined, although they remain above the panicked lows set during the rout that followed the employment data. And stocks resumed their recovery, leaving the S&P 500 within 1% of its all-time high.
