New York Times 11/15/24
A strong economy is giving Federal Reserve officials room to move “carefully” as they lower interest rates, the central bank chair said.
Jerome H. Powell, the chair of the Federal Reserve, said that a solid economy with low unemployment, robust consumer spending and strengthening business investment gives the central bank room to take its time in cutting interest rates.
“The economy is not sending any signals that we need to be in a hurry to lower rates,” Mr. Powell said in a speech prepared for delivery in Dallas on Thursday. “The strength we are currently seeing in the economy gives us the ability to approach our decisions carefully.”
The Fed’s policy-setting committee meets next in mid-December, and while policymakers are expected to lower rates by a quarter point at that gathering, Fed officials themselves have made it clear that a reduction is not guaranteed.
Mr. Powell did not address December specifically in his prepared remarks. But officials have made it clear that they will be watching incoming data points — including inflation and jobs figures — as they decide what to do.
“The path for getting there is not preset,” Mr. Powell said on Thursday. “In considering additional adjustments to the target range for the federal funds rate, we will carefully assess incoming data, the evolving outlook, and the balance of risks.”

Fed cuts rates by 0.25%, Powell deflects questions about Trump policies
By Alex Steger
Citywire 11/7/24
Powell was asked about the impact of the next administration’s policies on inflation and the economy but said that these would not play into the Fed’s immediate decisions.
‘Let me say in the near-term, the election will have no effects on our policy decisions. As you know, many, many things affect the economy and anyone who writes down forecasts in their job will tell you that the economy is quite difficult to forecast looking out past the very near term,’ he said.
‘Here, we don’t know what the timing and substance of any policy changes will be. We therefore don’t know what the effects on the economy would be. Specifically, whether and to what extent those policies would matter for the achievement of our goal variables, maximum employment, and price stability. We don’t guess, we don’t speculate, and we don’t assume.’

Bloomberg 11/25/24
US Treasuries have added to the gains spurred by the late-Friday announcement of Scott Bessent — a Wall Street veteran who investors expect will take the sting out of the administration’s more aggressive trade and economic policy proposals — as President-elect Donald Trump’s Treasury secretary choice.
Monday’s rally trimmed yields by more than 10 basis points across five- to 30-year maturities, gaining momentum in New York trading amid a drop in oil. The dollar slumped by the most in more than two weeks before paring the loss.
“Bessent is viewed as a potentially moderating influence on the incoming administration’s policies,” said Shaun Osborne, chief foreign-exchange strategist at Scotiabank. “Favoring gradualism on tariffs, for example.”
ImageBessent, who runs macro hedge fund Key Square Group, has called for a gradual approach to implementing trade restrictions and has appeared open to negotiating the exact size of tariffs championed by the president-elect. In an interview with the Wall Street Journal, Bessent said his priority will be to deliver on Trump’s various tax cut pledges, while also cutting spending and “maintaining the status of the dollar as the world’s reserve currency.”

*FED LOWERS BENCHMARK RATE 25 BPS TO 4.5%-4.75% RANGE
*Powell: Fed Is Not on Pre-Set Course, Will Continue To Make Decisions Meeting-By-Meeting
*Fed's Powell: We're On a Path To More Neutral Stance, Must See Where Data Lead Us

US election will have no near-term effect on Fed policy: Powell
Nov. 7 (AFP) -- The US presidential election outcome will have "no effects" on central bank policy decisions in the near-term, Federal Reserve Chair Jerome Powell told reporters Thursday, after Republican Donald Trump's victory at the polls.
"We don't know what the timing and substance of any policy changes will be. We therefore don't know what the effects on the economy would be," he added after the Fed unveiled its rate decision. "We don't guess, we don't speculate, and we don't assume."
da-bys/acb

Stocks Near Highs as Powell Gives ‘No Skip Signs’: Markets Wrap
Fed cuts rates for second-straight meeting to support economy
Policymakers change language around job market, inflation
By Rita Nazareth
(Bloomberg) -- Stocks hit fresh all-time highs, Treasury yields fell and the dollar dropped the most since August, with Jerome Powell saying that even after Thursday’s rate cut, policy is still restrictive.
The S&P 500 was up 0.8%. Treasury 10-year yields declined 10 basis points to 4.34%. The Bloomberg Dollar Spot Index fell 0.6%. The Fed Chair said he doesn’t rule “out or in” a December rate cut. He said recent indicators suggest the economy keeps expanding solidly. While inflation expectations remain anchored, core prices remain somewhat elevated, he said. Powell added that in the near term, the election will have no effect on policy.

Bloomberg 11/25/24
US Treasuries have added to the gains spurred by the late-Friday announcement of Scott Bessent — a Wall Street veteran who investors expect will take the sting out of the administration’s more aggressive trade and economic policy proposals — as President-elect Donald Trump’s Treasury secretary choice.
Monday’s rally trimmed yields by more than 10 basis points across five- to 30-year maturities, gaining momentum in New York trading amid a drop in oil. The dollar slumped by the most in more than two weeks before paring the loss.
“Bessent is viewed as a potentially moderating influence on the incoming administration’s policies,” said Shaun Osborne, chief foreign-exchange strategist at Scotiabank. “Favoring gradualism on tariffs, for example.”
ImageBessent, who runs macro hedge fund Key Square Group, has called for a gradual approach to implementing trade restrictions and has appeared open to negotiating the exact size of tariffs championed by the president-elect. In an interview with the Wall Street Journal, Bessent said his priority will be to deliver on Trump’s various tax cut pledges, while also cutting spending and “maintaining the status of the dollar as the world’s reserve currency.”

Bloomberg 11/7/24
The Bank of England cut borrowing costs for
the second time this year but stopped short of signalling faster
easing, warning that the budget will drive up inflation by as
much as half a percentage point.
Eight members of the Monetary Policy Committee led by
Governor Andrew Bailey voted to lower the benchmark interest
rate by a quarter point to 4.75%. Catherine Mann, one of its
external officials, was the lone dissenter, preferring to hold
at 5%. The outcome was widely anticipated by economists.
“We need to make sure inflation stays close to target, so
we can’t cut interest rates too quickly or by too much,” Bailey
said in a statement on Thursday in London. “But if the economy
evolves as we expect, it’s likely that interest rates will
continue to fall gradually from here.”

Bloomberg 11/5/24
Australia’s central bank held its key
interest rate at a 13-year high on Tuesday, aiming to keep up
the pressure on stubbornly sticky inflation while joining much
of the world in waiting for the outcome of US elections.
As expected, the Reserve Bank left its cash rate at 4.35%,
marking a year at that level, and restated that it isn’t “ruling
anything in or out” on policy. The RBA’s board highlighted the
“high level of uncertainty” about the international outlook.
Underlying inflation “remains too high,” the rate-setting
board said in a statement. “It will be some time yet before
inflation is sustainably in the target range and approaching the
midpoint. This reinforces the need to remain vigilant to upside
risks to inflation and the board is not ruling anything in or
out.”

Bloomberg 11/1/24
Treasury futures push to session highs in a bull-steepening move after October payrolls change fell short of median estimate with September change revised lower. The two-month net revision subtracted a total of 112k jobs.
On the day Treasury yields flip to richer by up to 7bp across front-end of the curve, which leads gains, steepening 2s10s spread by 3.5bp on the day
Fed-dated OIS prices in a combined 45bp of rate cuts over the remaining two meetings this year vs 42bp at Thursday’s close

TOKYO, Reuters 10/31/24
The Bank of Japan maintained ultra-low interest rates on Thursday but said risks around the U.S. economy were somewhat subsiding, signaling that conditions are falling into place to raise interest rates again.
The central bank also projected inflation would move around its 2% target in the coming years, stressing its resolve to keep raising borrowing costs if the economy sustains a moderate recovery.
"Looking at domestic data, wages and prices are moving in line with our forecasts. As for downside risks to the U.S. and overseas economies, we're seeing clouds clear a bit," Governor Kazuo Ueda told a news conference.
Ueda's remarks were less dovish than those made before Thursday's meeting that the BOJ can "afford to spend time" scrutinizing the fallout from risks such as U.S. economic uncertainties and volatile financial markets.
The dollar briefly fell to 151.92 yen from levels above 153 yen after Ueda's remarks, which were interpreted as heightening the chance of a rate hike in December.

Wall Street Journal 11/7/24
Asked about whether the Federal Reserve is considering a pause in rate cuts in December, Chair Jerome Powell said officials haven't made any decisions yet as they move the stance of monetary policy down to a more neutral level.
(Benzinga Newswire)Fed Chair Powell Says We Would Be Concerned If We Thought Long-term Inflation Expectations Are Anchoring Higher; That's Not What We See; Overall Inflation Expectations Are Consistent With 2% Inflation;

South China Morning Post 10/25/24
China's top legislature will convene a meeting from November 4-8 to discuss a
wide range of issues facing the world's second-largest economy.

The date was announced at a Friday meeting chaired by Zhao Leji, chairman of
the Standing Committee of the National People's Congress.

The upcoming meeting of the NPC Standing Committee arrives at a time when a
new US president will be elected on November 5 and as new China policy looks
to pose a fresh test to Chinese trade, tech and economy.

The meeting had been widely expected to be held at the end of this month.

Bloomberg *POWELL: IN NEAR TERM, ELECTION WILL HAVE NO EFFECT ON POLIC

Bloomberg 10/23/24
Traders are adding to wagers that the
European Central Bank will lower interest rates by half a
percentage point in December to a bid to prop up the bloc’s
flagging economy.
Swaps imply a 45% chance of a reduction of that size at the
final ECB meeting of the year, with 25 basis-point cuts priced
at every gathering through to June. Before last week’s decision
to cut, markets only envisaged a quarter-point move in December.
The repricing picked up after Reuters reported Wednesday
that the central bank is starting to debate whether interest
rates should be cut below neutral, to a point at which they’re
stimulating the economy. Inflation is already below the 2%
target and former powerhouse Germany is in recession.

MT Newswires 11/7/24
The Federal Reserve's monetary policy committee on Thursday reduced its benchmark lending rate by 25 basis points, following a 50-basis-point cut in September.

The Federal Open Market Committee reduced interest rates to a range of 4.50% to 4.75% from 4.75% to 5%, in line with a Bloomberg-compiled consensus.

"Since earlier in the year, labor market conditions have generally eased, and the unemployment rate has moved up but remains low," the FOMC said in a Thursday statement after its two-day meeting. Although inflation has made progress toward policymakers' 2% target, it remains "somewhat elevated," according to the statement.

Official data last month showed that US consumer inflation rose at a more-than-expected pace in September both sequentially and annually. Bureau of Labor Statistics data showed earlier this month that US job creation fell well short of Wall Street's estimates in October amid a Boeing (BA) strike and potential hurricane-related disruptions. The strike that lasted for more than seven weeks ended earlier this week.

"The committee judges that the risks to achieving its employment and inflation goals are roughly in balance," the FOMC said Thursday. "In considering additional adjustments to the target range for the federal funds rate, the committee will carefully assess incoming data, the evolving outlook, and the balance of risks," the FOMC said, reiterating its remarks from September.

Bloomberg 10/23/24
The front end of the Canadian curve outperforms after Bank of Canada cut interest rates 50bp to 3.75%, in line with estimate. Leading into the decision, the Bank of Canada OIS market was pricing in around 45bp of rate cuts, or roughly 90% chance of a half-point move.
Canada 2-year yields drop back below 3%, trade richer by around 3.5bp on the day in the aftermath of the decision and outperform on the curve — 2s10s Canada spread rises to session wides and trades higher by almost 4bp on the day
Canada 10-year yields drop back to near unchanged on the day, trading around 3.235%

FT 11/08/24
US Treasuries have recovered all the ground lost in a dramatic sell-off sparked by Donald Trump’s election victory, after Federal Reserve chair Jay Powell said it was too early to judge whether the incoming president’s policies would change the interest rate outlook.


The yield on the 10-year Treasury declined 0.05 percentage points to touch 4.29 per cent in London morning trading on Friday, almost exactly where it closed on November 5, the day before the US election result sent a “Trump trade” tearing across global financial markets.

Investors betting that Trump’s plans for tariffs and tax cuts would fuel growth and inflation piled into stocks and dumped bonds on Wednesday, betting that the path of interest rates would need to be higher than previously thought. The 10-year Treasury yield jumped to 4.48 per cent, a four-month high, as the results of the election came in.

But traders have unwound some of those bets over the subsequent two days, with the dollar also giving up part of its gains.

Some investors viewed the initial market reaction to Trump’s victory as a “knee-jerk” response to his campaign rhetoric on tariffs, questioning whether these represented an initial negotiating position and whether broad-based tariffs could get through Congress.

Bloomberg 10/17/24
The European Central Bank lowered interest rates for the third time this year as a hastier retreat in inflation allows it to offer support to the region’s stuttering economy.
The key deposit rate was cut by a quarter-point to 3.25% — as predicted by all analysts in a Bloomberg survey. The ECB said the process of taming prices is “well on track” but didn’t offer any clues on when or how quickly borrowing costs will be reduced from here.
The ECB “will keep policy rates sufficiently restrictive for as long as necessary to achieve this aim,” it said in a statement. “The Governing Council will continue to follow a data-dependent and meeting-by-meeting approach to determining the appropriate level and duration of restriction.”

Reuters 10/29/24
China is considering approving next week the issuance of over 10 trillion yuan ($1.4 trillion) in extra debt in the next few years to revive its fragile economy, a fiscal package which is expected to be further bolstered if Donald Trump wins the U.S. election, said two sources with knowledge of the matter.

China's top legislative body, the Standing Committee of the National People's Congress (NPC), is looking to approve the fresh fiscal package, including 6 trillion yuan which would partly be raised via special sovereign bonds, on the last day of a meeting to be held from Nov. 4-8, said the sources.

The 6-trillion-yuan worth of debt would be raised over three years including 2024, said the sources, adding the proceeds would primarily be used to help local governments address off-the-books debt risks.

The planned total amount, to be raised by issuing both special treasury and local government bonds, equates to over 8% of the output of the world's second-largest economy, which has been hit hard by a protracted property sector crisis and ballooning debt of local governments.

Dow Jones 10/8/2024

The Reserve Bank of Australia remains concerned about a
resurgence in inflation, which is likely to prevent it from joining the global
rush by central banks to lower interest rates, at least in the near term.

In minutes of its policy meeting in late September, the board of the RBA said
it "remains vigilant to upside risks to inflation."

"Monetary policy would need to be sufficiently restrictive until members were
confident that inflation was moving sustainably towards the target range and,
based on the information available at the time of the meeting, that it was not
possible to either rule in or rule out future changes in the cash rate target
at this time," it added.

Bloomberg 10/4/24
Traders are pricing in less than a quarter-point worth of interest-rate easing at the Federal Reserve’s November gathering after employment data offered evidence of a resilient US economy.
• Swaps traders are pricing in about 24.7 basis points of a rate cut at the Fed’s next meeting; they see about 56 basis points by the end of the year
• That marks a sharp pullback of expectations from before the jobs report, when traders had been pricing in about 33 basis points of easing for November — which had implied a solid chance of a larger, half-point reduction

New York Times 10/17/24
Policymakers who set interest rates for the 20 countries that use the euro have lowered rates in back-to-back meetings for the first time since 2011.
The European Central Bank cut interest rates on Thursday for the third time in about four months, as inflation in the eurozone has cooled faster than expected.
Policymakers who set interest rates for the 20 countries that use the euro lowered their key rate by a quarter point, to 3.25 percent. Thursday’s decision came just five weeks after a cut at the bank’s previous meeting, and on the day that a report showed the eurozone’s inflation rate slowing to 1.7 percent in September, falling below the bank’s 2 percent target for the first time in more than three years.
“The disinflationary process is well on track,” policymakers said in a statement.

Wall Street Journal 10/17/24
The Decision
The European Central Bank lowered interest rates for the second meeting in a row, speeding the pace of rate cuts to support an economy flashing increasing signs of weakness. The ECB said it would reduce its key interest rate to 3.25% from 3.5%. That widens a gap in benchmark borrowing costs with the Federal Reserve.