“Some of the private data (ADP payrolls) suggests a deceleration in the labor market and up-to-date weekly data on continuing claims suggests that those out of work are having a hard time finding work, while there is widespread evidence of credit stress for many Americans (delinquencies on credit card and auto debt). The government shutdown has added some risks at the margin to confidence, it seems and the latest confidence surveys (especially the Conference Board Consumer Confidence survey from November), which have traditionally been associated with the state of the labor market, suggest widespread unease. The Fed likely has the votes to cut rates in December as an “insurance policy” in the event conditions are deteriorating and despite the inflation outlook, while suggesting data-dependency beyond that – which will determine whether the trajectory of the cutting cycle before the end of Powell’s term in May. Beyond that, Fed rate decisions will likely become far more politically aligned with the US Treasury, depending on how heavily the Trump administration can influence the selection of the Fed regional presidents in February.”
Proactive Comments ahead of Fed Meeting: Saxo Bank
