The Fed’s careful balancing act of making insurance cuts to guard against global economic headwinds and normalize the yield curve without committing to extended cuts seems to have now gained acceptance with the markets. The entire yield curve has shifted lower since the July meeting because of the three rate cuts made this year. … READ MORE >
Economics
RSM Brexit Stress Index ends tumultuous week slightly higher
The financial markets priced in a bit more volatility and risk to the enduring Brexit saga. … READ MORE >
ISM Manufacturing Index continues to contract
The October ISM Manufacturing Index continued to contract in October, though it improved to 48.3 from September’s reading of 47.9, implying a modestly slower pace of contraction in domestic manufacturing sentiment. … READ MORE >
October US employment report: solid trend in hiring continues
The October report continues to imply a period of slower hiring ahead, excluding temporary census workers compared to one year ago which is in line with the overall slower pace of economic activity. The bottom line of the October U.S. employment report is that there is sufficient job creation and wage gains to support growth near the long-term trend of 1.8 % and keep the U.S. some distance from a total economic downturn. … READ MORE >
Fed cuts interest rate, but does not commit to more
The Federal Reserve reduced its targeted federal funds rate by a quarter point to a range between 1.5 and 1.75 percent at its October meeting Wednesday. In its policy statement, the committee removed the phrase “act as appropriate,” possibly opening the door to taking a wait-and-see approach to additional rate cuts. The change to the policy statement notes the central bank will monitor incoming information as it “assesses the appropriate path” of rates. … READ MORE >
Q3’19 GDP: Consumer keeps economy from drifting toward stall speed
Overall economic activity in the third quarter continued to decelerate with the top-line estimate indicating a 1.9% increase in growth and a 2% gain on a year-ago basis. Any way one slices this data set, one thing is clear: the U.S consumer is keeping the economy from sliding toward stall speed. … READ MORE >
RSM US Manufacturing Outlook Index remains negative
The RSM US Manufacturing Outlook Index continues to anticipate a slowdown in production, remaining negative in October at -0.59 standard deviations below normal conditions for the manufacturing sector. This is a slight improvement from its September value of -0.79 standard deviations. … READ MORE >
The jobs report comes out Friday. Put a big asterisk on it because of the GM strike.
We expect the U.S. employment report to show a net increase of 75,000 in total employment, well below the three-month average of 157,000. … READ MORE >
Expect the Fed to cut its target rate by a quarter point
We expect the Federal Reserve to cut the federal funds rate this week by 25 basis points to a range between 1.50% to 1.75%. … READ MORE >
RSM Brexit Stress Index eases after vote to delay Britain’s withdrawal from EU
Stress in the British financial markets continues to diminish along with the plausibility of the country extracting itself from the European Union common market by the Oct. 31 deadline. … READ MORE >