by Alasdair MacLeod
Gold Money
Jay Powell has signalled that inflation is moving sustainably towards the Fed’s 2% target and that the jobs market has cooled down. Hopes for an interest rate cut are rising, but the Fed is being misled badly…
The dynamics behind rate policy
Undoubtedly, market values everywhere are predicated on the Fed cutting rates. To a limited extent, this could become a self-fulfilling prophecy. So far, the effect on the 10-year US Treasury Note, which sets the valuation tone for all financial assets, has been to reduce its yield in recent months from 4.7% to under 4.2% currently. I have pencilled in a potential support line at 4.08% (the pecked line).
Prepare for liftoff, plus a look at bulls vs bears and more inflation.
Recent data by the Bureau of Labor Statistics showcased a favorable trend in inflation levels in the month of June. According to Yahoo Finance, the Consumer Price Index (CPI) surpassed economists’ expectations, falling 0.1% from the month of May, contrary to the forecasted rise of 0.1%.
In the latest Beige Book out this week, most Federal Reserve bank districts noted that retailers are offering discounts and price-sensitive consumers are buying fewer or lower-quality items.
Speakers at the Republican National Convention this week have faulted the Biden administration for putting the nation at risk from threats that include criminals, illicit drugs — and high prices.
On Friday’s broadcast of NPR’s “Morning Edition,” Chicago Federal Reserve Bank President Austan Goolsbee stated that while the May and June inflation reports were “excellent” ones, the frustration that he often hears that “I go to the grocery store. It is expensive. That’s not really going to change.”)
Jason Starr felt the first flashbacks of pandemic PTSD back in mid-April.
Inflation is difficult to control. Its cause is often even harder to pinpoint.
Some Federal Reserve officials have signaled recently that they might be closer to making a cut (or two) in the key interest rate they use as a lever to slow down or speed up economic activity. But it’s clear that when the year is out, rates will be in the same elevated range they are now.
The surge into the U.S. of immigrants lacking permanent legal status has emerged as one of the most politically charged issues of the 2024 presidential election.