American exceptionalism is the primary takeaway from one of the more remarkable years in labor market dynamics over the past half century as the economy generated 256,000 new jobs in December. That increase stands well above the 100,000 to 150,000 level that is necessary to keep employment ... READ MORE >
Joseph Brusuelas
Morning market minute: Net immigration, population growth and U.S. employment
The U.S. December employment report will most likely show a net increase of 180,000 jobs with the risk of a stronger print because of seasonal fluctuations, a post-hurricane rebound in hiring as well as solid gains in government, health care, education, and leisure and hospitality, The unemployment is ... READ MORE >
Morning market minute: India’s rising capital buffer and the end of its currency peg
As India has gained prominence in the global economy, its central bank, the Reserve Bank of India, has wisely increased the level of foreign exchange holdings. These reserves are necessary to maintain payments for imports should there be a global economic financial crisis or a sudden devaluation of the ... READ MORE >
Morning market minute: The end of the Indian rupee’s effective dollar peg
A currency is a two-sided instrument. In the case of the Indian rupee-U.S. dollar exchange rate, the demand for the rupee has been overwhelmed by the demand for the dollar and a loss of competitiveness over the two years that the Reserve Bank of India has maintained a de-facto peg to the dollar. Now, ... READ MORE >
Identifying countries at risk as the U.S. dollar surges
Over the past year the real trade-weighted dollar index has appreciated 6.88% because of a combination of interest rate differentials, strong growth and expectations of reduced regulation, lower taxes and increased government spending. With these trends showing no sign of easing, the greenback will ... READ MORE >
Stubborn inflation not stopping the U.S. consumer from spending
Stubborn and sticky inflation did not prevent the American consumer from tapping rising real incomes in November as the economy approached the traditional holiday season. Personal income increased by 0.3%, personal spending by 0.4% and real spending by 0.3% as households used the 1.1% increase in ... READ MORE >
Morning market minute: The strange logic of economic populism and government shutdowns
The prospect of a government shutdown and another unnecessary standoff in Congress over raising the nation's debt ceiling are providing a lump of coal in Americans’ holiday stockings. At issue are a $110 billion disaster relief bill, an extension of the farm bill and a two-year proposed suspension ... READ MORE >
Fed cuts rates as it signals a prudent pause to assess policy uncertainty
The Federal Reserve reduced its policy rate by 25 basis points to a range between 4.25% and 4.5% at its meeting on Wednesday while communicating to policymakers and the public that its reductions will be on pause until it gets a better sense of the policy changes to come. We are updating our ... READ MORE >
Morning market minute: What the Treasury yield curve is saying about the economy
Three months ago, in the week before the Federal Reserve’s first rate cut in the current cycle, the bond market was pricing in a two-year yield of 3.58%. The two-year yield has since risen to 4.23%, an increase of 65 basis points at a time when the Fed is cutting interest rates. Two-year yields are ... READ MORE >
Inflation risk premium suggests higher yields ahead
As the yield on the 10-year Treasury advances toward 4.5%—which is our baseline forecast for next year—the inflation risk premium is supporting that move. The inflation risk premium is the compensation that investors demand for the possibility that inflation may rise, or fall, and that premium is ... READ MORE >