Ben Hayward’s Post

The title of this year’s Jackson Hole Economic Symposium is “Reassessing the effectiveness and transmission of monetary policy”, an important question given the remarkable resilience developed market economies have shown to the sharpest interest rate hiking cycle we have seen in four decades. All eyes and ears will be on Fed Chair Jerome Powell, as he delivers his speech, with the market looking for any clues on potential interest rate cuts, following the sell-off and subsequent recovery sparked by labour market data earlier this month. Read more in the latest blog by George Curtis: https://okt.to/7IEiRU #monetarypolicy #resilience

After last week's economic data Jonathan Dane, CFA suggests the landscape is set for the Fed to make its first rate cut in the coming months. He notes that historically the Fed has pre-emptively cut rates when markets were near all-time highs, and the current setup aligns perfectly. Read his commentary now. https://lnkd.in/eD3AaUrD #markets #investing #economy #economics #financialplanning

LinkedIn Post: 🚨 Economists express growing concerns over the Fed's tight monetary policy, signaling potential challenges ahead for the economy. With 21% of economists deeming the policy "too restrictive," the debate intensifies as Jerome Powell hints at a March rate cut being unlikely. How will this impact the future of monetary policy and the broader economic landscape? #EconomicPolicy #Fed #MonetaryPolicy #EconomistsConcerns 📈📊

https://lnkd.in/gRKbJ7Uq With their forecasts stymied last year by faster economic growth and lower inflation than expected, and now by higher inflation and slowing growth, Fed officials of late have supplemented discussion of their outlook with the top alternate paths they think the economy may follow. Both a nod to what they don't know and a way to keep public expectations more fluid, it's a strategy Powell may well follow in his press conference after the end of a two-day policy meeting on Wednesday as a way to shift the center of attention from the new Summary of Economic Projections and its market-shaping plot of where officials think the policy interest rate is heading, with a focus on the median. #bonds #interestrates #fixedincome

WALLER, FED CAUTION, BREAKEVENS, AND BEARISH STEEPENING: Waller's speech yesterday is interesting, balanced, sort of, and clearly a recognition that the dovish message from the September FOMC may have been premature. However, the idea in his scenario #3 for the economy in which inflation rises again that the Fed response is to just not cut is, well, concerning for duration. My guess is that he would actually turn hawkish in that scenario, but is perhaps constrained in what he can say right now. But if the current Fed thinking really is that appropriate policy for a scenario in which robust growth persists and inflation rises somewhat is to just remain unchanged, we need to think harder about further bearish steepening and higher TIPS breakevens. https://lnkd.in/eiF6Bfjf

The Federal Reserve always thinks we live in unusually uncertain economic times. Since 2011, monetary policymakers have nearly unanimously thought that the outlook for GDP, inflation, and the unemployment rate was more up in the air compared to the previous 20 years. This might be contributing to some institutional inertia around turning points in the business cycle because Fed officials are on the record as saying they’d rather do nothing than do something too soon. Or this may be just pure butt-covering to avoid looking clueless in the event that an economic shock comes out of left field. Right now, for instance, the Federal Reserve is waiting for greater confidence that inflation is returning sustainably to target. But as our friend Neil Dutta notes, “the Fed is passively and needlessly tightening policy by doing nothing. The unemployment rate has increased 0.6ppt from its low to 4.0% and core inflation has eased. It does not take a rocket scientist to figure out what needs to be done.” https://lnkd.in/egjtCmkz

Bull market is coming

 Global macro dynamics: Trends and implications for investors By Max Rix, MBA In the evolving landscape of the U.S. economy, the U.S. Consumer Price Index (CPI) for March, while not disastrous, confirmed a persistent trend of inflation remaining stubbornly above the Federal Reserve's traditional 2% target, consistently registering between 3-4%. This pattern suggests that despite official targets, we at Simonis Storm are increasingly viewing '3 as the new 2'—a reflection of what we believe the Federal Reserve may need to acknowledge as the new normal under current economic conditions. This perspective is not explicitly shared by the Fed, but we foresee that it might become an implicit standard given the global and domestic pressures driving prolonged inflation, including robust wage growth. https://lnkd.in/dJVkcrBt #investors #useconomy #FederalReserve Simonis Storm

The Fed's hikes have had a distributional impact, with those in debt being negatively impacted while those with assets are positively impacted #investorconfidence The Fed's decisions have had far-reaching consequences #macroeconomics, and it will be interesting to see how the economy continues to be affected in the coming months. Torsten Slok explains that the lagged effects of these hikes will slow down the economy #recessionrisk, with the consequences being felt for up to 18 months. This is exactly what the textbook would have predicted. The impact on savings is also evident, with those making less than $25,000 a year seeing lower savings than in 2019. Meanwhile, the top 20% of incomes are responsible for 40% of consumer spending, keeping the economy afloat. Source: https://lnkd.in/duc2jmFV

From the desk of Terry Tyrrell in 2024 Russell Investments - Market Week in Review:- What does the latest U.S. inflation report reveal? Executive Summary:- * The August consumer price index report showed that U.S. inflation slowed to 2.5% * Polling markets suggest that the race for the White House remains extremely tight * Exports surged in China while inflation stayed soft Click the link to watch the 5min video or read the report. To learn more about Russell reach out to your local Regional Manager NSW/ACT - Terry Tyrrell SA/WA - Ross Nayler VIC/TAS - Peter Poulopoulos VIC - Rebecca Yabsley QLD - James Noone QLD - Jack Fitzgerald Have a terrific weekend. Terrific #russellInvestments #weekinreview #marketupdate