Fed decision could come down to wire, needs data to confirm rate cut
Nasdaq ~flat; S&P 500 slips, Dow dips
Industrials weakest S&P sector; Comm Svcs up most
Euro STOXX 600 index up ~0.4%
Dollar, bitcoin dip; gold up; crude jumps ~3%
U.S. 10-Year Treasury yield edges up to ~4.21%
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FED DECISION COULD COME DOWN TO WIRE, NEEDS DATA TO CONFIRM NEXT RATE CUT
Federal Reserve officials want to continue to cut rates at this month’s meeting, but the decision could come down to the wire and next two weeks of data will be the deciding factor on whether or not they are able to do so, according to Tom Fitzpatrick, head of global market insights at R.J. O'Brien.
U.S. Treasury yields and the dollar slipped on Monday after Fed Governor Christopher Waller, whose views are often a bellwether for U.S. monetary policy, said that with inflation still forecast to fall to 2% he is inclined "at present" to support another interest rate cut later this month.
But Fitzpatrick says that the most important aspect of the speech was not that he would likely support a cut. It was that “he clearly left the door open for a pause by saying that he would be closely watching the data ahead of the meeting for any signs that it was running ‘hot’.”
Waller mentioned several data points that he would be watching, including job openings, employment, producer and consumer prices and the retail sales report.
Including retail sales in this list was “super interesting,” as it is not a part of the Fed’s mandate, and because it will be released on Dec. 17, the first day of the Fed’s two-day meeting on Dec. 17-18, Fitzpatrick said.
“Waller told you that he is prepared to "go to the wire" in that respect-literally into the first day of the meeting,” Fitzpatrick said. “THEY WANT TO PAUSE- The only question is whether the next 15 days of data will allow them to do so.”
(Karen Brettell)
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