2024-07-08 09:20:32 ET
Summary
- Signs of a weaker labor market and consumer fatigue should prompt Fed to ease monetary policy.
- Bond market suggests need for more aggressive monetary easing than the Fed is projecting for 2024.
- Concerns about economic growth, softening labor market conditions, and contraction in service sector signal need for Fed action.
One week ago, I surmised that signs of a softer labor market and consumer fatigue would raise concerns that the Fed is waiting too long to ease monetary policy, as fears of inflation give way to worries about weaker rates of economic growth. While we had plenty of signs of weakness in last week’s economic data, investors did not seem to be concerned, as the S&P 500 rose to a new all-time high. Bonds rallied on the weaker data, driving long-term yields lower, which helped fuel more gains for the technology sector. Investors may not be concerned yet, but my antennas are up for a policy mistake, as I think the Fed should start to reduce rates soon to get in front of a further deceleration in the rate of economic growth during the second half of this year....
Read the full article on Seeking Alpha
For further details see:
Will Powell Make The Same Mistake Twice?