The Fed members that vote on the FOMC, seem to be shifting their focus from inflation to unemployment. As you can see on the chart below, on the September meeting, only 3 voting members where concerned about inflation spiking up and no member was concerned about deflation or disinflation. However, 12 voting members were concerned about unemployment going up. With this information, it seems that a data dependent Fed, will likely continue to lower rates, as the unemployment side of the mandate weighs in. This is confirmed by Fed Funds futures, that are discounting a 78% probability of a 25 bps cut on December 18th. During November, the probability of a cut was in the 50s, but has now gone up to a level where the Fed will feel uncomfortable surprising the market. Friday’s unemployment will likely provide confirmation on the Fed’s next move.
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