Janet Yellen intends to hold firm against market pressure as her press conference showed yesterday. The 0.25% rise in federal funds was downgraded to a modest move, wholly anticipated by investors, while hinting at a moderate path in rate hikes over the next couple of years.
It is too early to guess what kind of economic policy the Trump administration may deliver. The markets are crossing their fingers and praying the President-elect will ultimately hand over matters to an experienced team.
BoAML | With an abundance of stories about how things can go wrong for the US economy, we are often asked to lay out a scenario in which the data surprise to the upside. In our view, the burden rests on the labor market. If there is an increase in demand for labor, which is met by a gain in supply, we could settle on a stronger trend in job growth.
J. L. M.Campuzano (Spanish Banking Association) | Fed deputy chairman Fisher said last Tuesday that any future decision on interest rates will depend, in the end, on the data. The market is now awaiting the US August jobs figures, due out tomorrow. This will be the key indicator anticipating a September rate hike. They say that more than 150,000 new jobs will be a sufficient trigger for the Fed to take its decision this month. And the necessary condition? That the rest
Some accounting data from US companies offers an interesting reading: there is no doubt that the behaviour of listed companies has changed with the crisis. But what is even more important is that there was a structural change quite a bit before that. US companies are now increasingly less focused on investment in tangible capital and are quickly moving towards capital which is more intangible and/or financial.
Benjamin Cole via Historinhas | There is a rough consensus among US macroeconomists that topics for discussion are the bad minimum wage, the virtues of free trade, and inflation.
AXA IM | Yet when looking at the US economy we see low unemployment, continued strong job gains, increased personal income and rising core inflation. The traditional end-of-cycle dynamics (rapid increase in wage costs, monetary tightening, reduced profitability) are not screaming “recession” at us.
BARCLAYS | In our view, achieving the FOMC’s target of 2% PCE inflation may require a substantial undershoot on the unemployment rate ( to 4% if not below ). Should the unemployment rate remain near current levels or should inflation expectations drift lower, the FOMC would be unlikely to hit its inflation target over the foreseeable future.
There is a definite clash between investors and economists over the US economy. According to Intermoney’s Spanish analysts, markets are looking for reasons to take apart the thesis about the country’s resilient activity, arguing that moderate growth is insufficient. Then there are the economic purists, including many Fed members, who are confident the US recovery is sustainable.