Bloomberg 11/29/23
• Forecast range 680k-773k from 50 estimates, median 721k
• New home sales fell 40k in Oct. from prior month, the Census Bureau said

...Governor Christopher J. Waller 11/27/23
At the American Enterprise Institute, Washington, D.C.
I am encouraged by what we have learned in the past few weeks—something appears to be giving, and it's the pace of the economy. Data for October indicated an easing in economic activity, and forecasts for the fourth quarter show the kind of moderation that is more in keeping with progress on lowering inflation. In addition, after watching core PCE inflation increase in September from its summer lows, the latest data showed inflation moving in the right direction in October, albeit gradually.
While I am encouraged by the early signs of moderating economic activity in the fourth quarter based on the data in hand, inflation is still too high, and it is too early to say whether the slowing we are seeing will be sustained. But I am increasingly confident that policy is currently well positioned to slow the economy and get inflation back to 2 percent. That said, there is still significant uncertainty about the pace of future activity, and so I cannot say for sure whether the FOMC has done enough to achieve price stability. Hopefully, the data we receive over the next couple of months will help answer that question.

...Governor Christopher J. Waller 11/27/23
At the American Enterprise Institute, Washington, D.C.

There has also been a lot of discussion about the overall easing of financial conditions this month, as reflected in market interest rates and the prices of other assets. To put this easing into perspective, from July to the end of October, the yield on the ten-year Treasury increased about 1 percentage point. Since the FOMC's last meeting, which ended November 1, the ten-year rate has fallen six tenths of a percentage point. Long-term interest rates are still higher than they were before the middle of the year, and overall financial conditions are tighter, which should be putting downward pressure on household and business spending. But the recent loosening of financial conditions is a reminder that many factors can affect these conditions and that policymakers must be careful about relying on such tightening to do our job.

Bloomberg 11/22/23
The coalition can suspend the debt brake rule with its
majority in the lower house of parliament, though it would also
be potentially exposing itself to another legal challenge.
In what may have been the first hint of an imminent
climbdown, one of Lindner’s economic advisers was quoted as
saying Tuesday that a retroactive emergency suspension of the
debt brake for 2023 would be justifiable.

Bloomberg 11/28/23

German Chancellor Olaf Scholz’s government approved a supplementary 2023 budget that includes the suspension of rules limiting net new borrowing for a fourth consecutive year.
Scholz’s coalition was forced into lifting the so-called debt brake again after a ruling this month by the nation’s top court meant that tens of billions of euros of debt in special funds would have to be accounted for in the regular federal budget.
While it doesn’t mean that Germany is adding to its debt burden, it lifts the figure for net borrowing for this year by €25 billion ($27.4 billion) to €70.6 billion, according to the Finance Ministry. In the original 2023 plan approved at the end of last year, it was €45.6 billion.

FOMC minutes 11/21/23
(1)Participants' Views on Current Conditions and the Economic Outlook
Participants noted that real GDP had expanded at an unexpectedly strong pace in the third quarter, boosted by a surge in consumer spending. Nevertheless, participants judged that aggregate demand and aggregate supply continued to come into better balance, as a result of the current restrictive stance of monetary policy and the continued normalization of aggregate supply conditions. Participants assessed that while labor market conditions remained tight, they had eased since earlier in the year, partly as a result of recent increases in labor supply. Participants judged that the current stance of monetary policy was restrictive and was putting downward pressure on economic activity and inflation. In addition, they noted that financial conditions had tightened significantly in recent months.

(2) Participants expected that the data arriving in coming months would help clarify the extent to which the disinflation process was continuing, aggregate demand was moderating in the face of tighter financial and credit conditions, and labor markets were reaching a better balance between demand and supply.

(3) Participants discussed several risk-management considerations that could bear on future policy decisions. Participants generally judged that, with the stance of monetary policy in restrictive territory, risks to the achievement of the Committee's goals had become more two sided.

...Bloomberg Economics 11/30/23
OUR TAKE: The October personal income and spending report shows why FOMC members are increasingly confident that rates are sufficiently restrictive. With softening income growth and some help from falling energy prices, the PCE deflator — the Fed’s preferred metric for assessing progress on its inflation mandate — is on track to come in lower than the median FOMC member’s forecast for end-2023. The momentum is for disinflation to continue through at least mid-2024, when core PCE inflation likely will fall below 3%.

Bloomberg 11/16/23
Presidents Joe Biden and Xi Jinping emerged
from their first meeting in a year betting that a handful of
small victories will arrest a surge in US-China tensions that
has unnerved neighboring nations and threatened global economic
growth.
Expectations were low owing to deep-seated differences over
trade, Taiwan and human rights, and even the summit’s modest
accomplishments were hard-won. Those included deals to try to
address the fentanyl crisis and to restore military
communications severed after then-House Speaker Nancy Pelosi
visited Taiwan last year.
In a sign of how much remains to be done, there was no
evidence of progress on bigger issues like US curbs on microchip
exports, tariffs or tensions in the South China Sea, where
Chinese and US ships and planes have had a series of provocative
encounters.

Bloomberg 11/9/2023
Le Maire said it was essential to have an agreement by the
end of the year, saying the “whole credibility of the EU is at
stake.”
“We are working very hard with Christian and the German
team,” Le Maire said. “We are making progress. The mood is an
excellent one. We are moving in the right direction.”
Lindner, speaking shortly after the French minister, said
substantial progress has been made and that he’s more optimistic
about achieving a political agreement this year, though he added
that much more work is needed.
“A Franco-German initiative could lead to a mutual
understanding among all member states,” he said. “Now it’s about
numbers, not only instruments.”

...WSJ 11/28/23
Fed governor Chris Waller on rate cuts: "If you see this [lower] inflation continuing for several more months, I don't know how long that might be—3 months? 4 months? 5 months?—you could then start lowering the policy rate because inflation's lower.

Bloomberg 11/8/2023
Federal Reserve Governor Christopher Waller said the US labor market is cooling this year without there being a big spike in unemployment as the economy has returned to a better balance between the supply and demand for workers.
“It’s slowing down,” Waller said in a speech in St. Louis. “We’re looking at the labor market, we’re seeing it normalized” and getting into “better balance between supply and demand.”
Waller made his comments following signs the labor market has shown of easing. Nonfarm payrolls increased by 150,000 last month following a downwardly revised 297,000 gain in September, a Bureau of Labor Statistics report showed Friday. The unemployment rate climbed to 3.9%, and monthly wage growth slowed.
The Fed governor pointed out that the ratio of job openings to the number of unemployed workers has come down in recent months.
“What we’ve seen since May ‘22, vacancies have kind of come down and the unemployment rate is still very, very low,” he said.

...MarketWatch 11/14/2023
Not only are traders seeing a higher likelihood of the
Federal Reserve cutting interest rates up to five times in 2024, they now
expect the first cut could arrive as soon as March, almost exactly two years
after the Fed started its most aggressive rate-hiking cycle since the 1980s.
According to CME Group's FedWatch tool, perceived chances of a rate cut from
the Fed arriving in March have risen to nearly 27%, up from 10.5% a day
earlier.

Bloomberg 11/14/23
Treasury yields plunged Tuesday as a slower-
than-anticipated pace of consumer price growth last month
bolstered the view that the Federal Reserve’s most aggressive
interest-rate hiking cycle in decades is over.
The 10-year note’s yield fell as much as 19 basis points to
4.45, the lowest level since Sept 25. Meanwhile, the 30-year
bond’s yield fell 14 basis points to 4.65%. Swap contracts used
to hedge future Fed actions marked down the odds of another rate
increase to almost nil.

Wall Street Journal 11/3/23

Hiring slowed sharply in October, a sign the economy is cooling this fall following a hot stretch over the summer.
U.S. employers added 150,000 jobs in October, down from the previous month's revised gain of 297,000, the Labor Department said Friday. That was the smallest gain since June, with automakers having around 33,000 fewer workers on payroll because of the United Auto Workers strike. The unemployment rate rose to 3.9% from 3.8% the prior month.
The figures could bring the Federal Reserve's historic interest-rate increases to an end by providing stronger evidence that higher borrowing costs have slowed the economy.

Bloomberg 11/2/23

The Bank of England left its benchmark lending
rate at a 15-year high, ruling out any possibility of letting up
on its fight against inflation for the foreseeable future.
Governor Andrew Bailey and his colleagues agreed that a
“restrictive” policy stance would be needed “for an extended
period of time” to curb Britain’s inflation rate, which remains
triple the target and the highest in the Group of Seven nations.

(1A) FOMC press conference 11/1/23

The Committee decided a today's meeting to maintain the target range for Federal funds rate as 5.25 to 5.5 and continue the process of significantly reducing our securities holdings. We are committed to achieving a stance of monetary policy sufficiently restrictive to bring inflation sustainably down to 2% over time, and to keeping policy restrictive until we are confident that inflation is on a path to that objective. We are attentive to recent data showing the resilience of economic growth and demand for labor. Evidence of growth persistently above potential, or the tightness in the labor market is no longer easing, could put further progress on inflation at-risk and could warrant further tightening of monetary policy.

(1) Wall Street Journal 11/1/23

WASHINGTON -- The Federal Reserve held interest rates steady at a 22-year high but kept the door open to potentially raising them later to keep slowing inflation.
Officials described recent economic activity as strong and highlighted how a run-up in long-term interest rates could weigh on economic activity, according to a statement after their two-day meeting.

(2) Bloomberg 11/1/23
Federal Reserve Chair Jerome Powell said the US central bank is “proceeding carefully” with further tightening, given how far it’s come to date.
“Given how far we have come, along with the uncertainties and risks we face, the committee is proceeding carefully,” Powell said Wednesday during a press conference after the central bank’s latest two-day policy meeting.
“We will make decisions about the extent of additional policy firming, and how long policy will remain restrictive, based on the totality of the incoming data, the evolving outlook and the balance of risks,” he said, referring to the policy-setting Federal Open Market Committee.

(3) FOMC press conference 11/1/23

we are attentive to the increase in longer-term yields which have contributed to a tightening of broader financial conditions since the summer. As I mentioned, persistent change ifs broader financial conditions can have implications for the path of monetary policy. In this case the tighter financial conditions we are seeing from higher long-term rates and also from other sources like the stronger dollar and lower equity prices could matter for future rate decisions, as long as two conditions are satisfied. The first is the tighter conditions would need to be persistent. And that is something that remains to be seen. But that is critical. You know, things are fluctuating back-and-forth. That is not what we are looking for. With financial conditions we are looking for persistent changes that are material. The second thing is that the longer-term rates that have moved up, they can't simply be a reflection of expected policy moves from us that we would then, if we didn't follow through on them, then the rates would come back down. I would say on that, it does not appear that an expectation of higher near-term policy rates is causing the increase in longer-term rates.

(4) FOMC press conference 11/1/23
>> Mr. Chairman, I assumed there was a tightening bias in the economy. You look at the tightening stance policy to the extent you may need to additionally hike, but you didn't say earlier super sufficiently restrictive among forecast or rate hikes among most members of the Committee. But then you said you haven't made a determination. Would you say the bias right now is it is neutral, and the Committee has moved largely off of this forecast for two hikes -- I am sorry, one additional hike? >> CHAIRMAN POWELL: No, I wouldn't say that at all. I would say, the language looking at it here, in determining the extent of additional policy-firm that may be. >> CHAIRMAN POWELL: To return inflation to 2% over time, that is question we are asking. >> Is it right to think of that as a bias still in the Committee here? >> CHAIRMAN POWELL: We haven't used that term but it is fair to say that is the question we are asking, should we hike more. In September we wrote down one additional rate hike, but, you know, we will write down another forecast, as you know, in December

(F) >> CHAIRMAN POWELL: Let's talk about the dot plot first. The dot plot is a picture in time of what the people in the Committee think is in light of personal policy in light of their own personal economic forecast. In principle, when things change, that is not planned that anybody agreed to or we will do. That is a forecast that would change, for example. I mean, many things could change that would cause people to say I would not write down that dot six weeks later. Think of the number of things that could change your mind on that. I think the efficacy of the dot flat probably decays between the three month period between that meeting and the next meeting. But nonetheless it is out there. We personally update the forecast but we don't formally update the dot plot. So, we are trying to be transparent about how we think about these things.

Bloomberg 10/25/2023

The Bank of Canada kept interest rates unchanged for a second straight meeting, but left the door open to more tightening even as officials forecast weaker economic growth.

Policymakers led by Governor Tiff Macklem held the benchmark overnight lending rate at 5% on Wednesday, the highest level in 22 years. The pause was expected by markets and economists, and marks the fourth time officials sat on the sidelines this rate cycle, in which borrowing costs have jumped 475 basis points since March 2022.

Bloomberg 10/26/2023

The initial rise in Treasury yields in the aftermath of stronger-than-expected GDP and durable goods data was quickly erased, leaving yields down on the day, as futures jump to fresh session highs. Weekly initial jobless claims released at the same time came in slightly above estimate with small upward revision to prior week.
• On the day Treasury yields are down by 1b to 3bp across the curve; 2-year yields lower by 3bp on the day after initially jumping to cheapest levels in the immediate aftermath of the data

*ECB LEAVES MARGINAL LENDING FACILITY AT 4.75%; EST. 4.75%
*ECB LEAVES DEPOSIT FACILITY RATE AT 4.00%; EST. 4.00%
*ECB LEAVES MAIN REFINANCING RATE AT 4.50%; EST. 4.50%

Bloomberg 10/26/2023

Any discussion of when to cut interest rates is “totally premature,” ECB President Christine Lagarde said at a news conference in Athens.
• ECB is currently in a holding pattern
• “So how long is sufficiently long? You know, obviously, we refer to timely manner sufficiently long, but in the same breath I say we shall be data dependent”
• “Now is not the time for forward guidance. Now is the time to really stick to our data dependency”

Bloomberg 10/31/2023

The Bank of Japan further loosened its grip on government bond yields while sticking with its position as the last global central bank to cling to a negative interest rate.
The BOJ said it will take a more flexible approach to controlling yields on 10-year government debt, saying the 1% level was now a reference point, according to its statement Tuesday. That marks a shift from a previous pledge of daily bond purchases at 1%, a stance that effectively drew a clear line in the sand there.


Bloomberg 10/23/2023

Bank of Japan officials are pondering the question of whether to tweak the settings of the yield-curve control program as domestic long-term interest rates float
higher in tandem with those in the US, the Nikkei newspaper reported on Sunday, without saying where it obtained the information. The topic will probably be discussed at the next two-day board meeting that ends Oct. 31, with some officials cautious about the idea as they continue to monitor wage trends, the
Nikkei said.

Bloomberg 10/19/2023

Treasury futures push to fresh session highs across the curve in the aftermath of Fed Chair Powell’s prepared remarks to the Economic Club of New York, in which he says the central bank will be “proceeding carefully.” Fed-dated OIS trims around 2bp of hike premium from the December and January policy meetings.
• Front-end Treasury yields richer by 3bp-5bp, steepening the curve; 5s30s spread widens from around 4bp to 8bp
• US 10-year yields flip to little changed around 4.92%, unwinding early selloff
• Fed-dated OIS prices around 10bp of hike premium into the December meeting, down from 12bp priced Wednesday close, while January FOMC prices in around 13bp of hikes vs 15bp prior

WSJ 10/18/2023

"This is a time where we just sit for a little bit. It may be for an extended
period; it may not. But let's see how things evolve over the next few months,"
said Harker, who has a vote on interest-rate policy this year.


WSJ 10/18/2023

"This is a time where we just sit for a little bit. It may be for an extended
period; it may not. But let's see how things evolve over the next few months,"
said Harker, who has a vote on interest-rate policy this year.

Something’s Got to Give -Governor Christopher J. Waller 10/19/2023

At the Distinguished Speaker Seminar, European Economics and Financial Center, London, United Kingdom
I find myself thinking about two possible scenarios for the economy in the coming months. In the first, the real side of the economy slows. This is the scenario broadly reflected in the September Summary of Economic Projections (SEP) by FOMC participants, where an easing in demand helps bring the economy into better balance with supply and allows inflation to move closer to our 2 percent objective. In this scenario, I believe we can hold the policy rate steady and let the economy evolve in the desired manner.

Bloomberg 10/17/2023

The Federal Reserve Bank of Atlanta's GDPNow index suggests U.S. gross domestic product will expand 5.44 percent in the third quarter vs 5.15 percent in its previous release on Oct. 10.

Bloomberg 10/18/2023
China’s economy gained momentum last quarter
as people ramped up spending on everything from restaurants and
alcohol to cars, offsetting a drag from the property crisis and
putting Beijing’s annual growth goal well within reach.
Gross domestic product for the three months ended September
expanded 4.9% year-on-year and 1.3% from the previous quarter,
far exceeding economists’ expectations as government stimulus
efforts appeared to take root.

Bloomberg - 10/5/ 2023
Federal Reserve Bank of San Francisco President Mary Daly said policymakers can hold interest rates steady if the labor market and inflation continue to cool or financial conditions remain tight.
“If we continue to see a cooling labor market and inflation heading back to our target, we can hold interest rates steady and let the effects of policy continue to work,” Daly said Thursday in remarks prepared for an event hosted by The Economic Club of New York.
“Importantly, even if we hold rates where they are today, policy will grow increasingly restrictive as inflation and inflation expectations fall,” Daly said. “So, holding rates steady is an active policy action.”
“Likewise, if financial conditions, which have tightened considerably in the past 90 days, remain tight, the need for us to take further action is diminished,” she added.

DALY: RECENT BOND MARKET TIGHTENING EQUAL TO ABOUT 1 RATE HIKE
*DALY SUGGESTS IF YIELDS REMAIN HIGH, NO NEED FOR ANOTHER HIKE

Dow Jones 10/17/2023
Germany's economic outlook improved more than expected in October on expectations that inflation will continue to tick down, according to a monthly survey published Tuesday.
The ZEW Indicator of Economic Sentiment for Germany over the next six months jumped 10.3 points to minus 1.1 in October, only slightly below the historical average, from minus 11.4 in September.
Economists polled by The Wall Street Journal expected a smaller rise to minus 8.5.
"It seems that we have passed the lowest point. There's a noticeable uptick in the economic expectations of financial market experts in October," ZEW President Achim Wambach said