The Federal Reserve, now, has a scandal shock ahead of size, still under construction, that Trump did not yet end up sculpting. This Tuesday and Wednesday, a meeting to rent balconies
The Fed is already ready to resume interest rates. He cut a complete point last year, before President Trump assumed his second term on January 20. The last half point dispatched him when he already knew his electoral victory. And he kept his arms crossed since December. I wanted to know for sure the policies that the tycoon was going to deploy, and not prejudice to the basis of his campaign speech. Nobility obliges, the president respected his word. The rise of tariffs to Mansalva, the mass deportations and the tax reduction approved by the Congress are palpable and not mere promises. The Fed, now, has a scandal shock ahead of size, still under construction, which Trump did not yet end up sculpting. Know, finally, the profile of the monster with which you must deal.
Its outgoing features are upward inflation that no longer converges to the 2% goal but moves away at a redoubled pace. And simultaneous tenacious decrease in demand and job supply. Of the two, despite the purges of the immigration authorities, the demand falls faster. As a consequence, unemployment expands. Without hurry, still in the confines of full occupation, but without pause. For the first time since April 2021 there are more unemployed than labor searches. That is the yellow light that titrates the most on the command board. From day one, Trump shouts that the wolf is, that interest rates must go down immediately. But it is the alert of increasing unemployment, and not the voice of command that the White House teaches, which already crumbs to the long rates and makes a wink to Jerome Powell. The Fed points map “promised” two casualties of a quarter quarter before the end of the year. It’s time to start complying. Luck is thrown, says Chicago’s futures. This Wednesday will come the first, wrapped in a new indicative roadmap.
Inflation: How is the dynamic behind the acceleration?
August inflation rose with enthusiasm. The Fed does not ignore it. The report, with the exception of the stable cost of medical care, was horrible. Consumer prices climbed 0.4%. If food (+0.5%) and energy (+0.7%) are removed, the nucleus definition advanced 0.3%. The interannual inflation, which was 2.4% in March, before the day of tariff liberation, climbed to 2.9%. The core measurement went from 2.8% to 3.1%, although it helped the balm of energy prices (+0.2% year -on -year).
How is the dynamic behind this acceleration? Tariff rise pushes inflation core of physical goods (+1.5% year -on -year), which knew how to be negative after the maelstrom of the pandemic and until last January. Instead, The inflation of services, since May, remains stuck at +3.6%. Of course, its most virulent component, the cost of accommodation yields month to month. Tariff rise does not imply an increase in inflation, although it is registered as such. It is, strictly speaking, an increase in prices for once. The Fed would say that it is transitory inflation, if it were not because it burned with milk in the pandemic, and chamuscó the adjective. But think so. Standard lines of importable goods – such as furniture – that starred in a price envy in June no longer exhibited changes in August. Wholesale prices, on the other hand, declined 0.1% last month. Its interannual variation, which was 3.8% in January, was thus reduced to 2.6%.
DOLLAR MARKETS INFACCACIÓN USA
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The Central Bank will monitor inertia. Inspect the channels where a contagion could spread. Given the anemia of the labor market, a spiral of prices and salaries does not glimpse. And trust the stability of implicit expectations in the bond yields. That the consumer scares himself, and declares visions as an inflation of 4.8% in the next 12 months, will disturb him more on the side of the weakness of added spending and his recessive drift than by an alleged revolution of prices.
More unemployed than labor searches
Together with the inflation on the rise, The news of an unexpected jump from the initial orders of unemployment subsidies arose. There were 27 thousand extra applications in the week that ended on September 6. Its level -263 mill- is the highest of the last four years. But the Labor Day holiday, and the decreasing quality of statistics in the US, forces the data with tweezers. It is not necessarily the signal of a collapse in crescendo as it could be thought of the naked eye. The Annual Review of the April 2024 period – March 2025 deleted 911 thousand jobs from a stroke. The deceleration, then, comes from before. His slope, thus, looks less pronounced than what was estimated. In the light of these figures, the aggressive drop of fees of 2024 appears as a prescious decision, stirred by the red light of the Sahm rule and less politicized than what could be argued in real time.
Jay Powell, surely, will be very present, although in this eggplant nobody recognizes the good smell. The rhyme. It is time to resume the loss of rates and repeat the play so that the destruction of June positions (-13 thousand, still subject to reviews) is effectively a floor. July (+79 thousand) and August (+22 thousand) already contributed better records. And it is possible to wait – because it is a very marked historical pattern – that August’s corrections increase the initial number. On the other hand, the labor market changed with the permanent reduction of foreign work hand. He shrinked. Holding it in balance requires the addition of a significantly lower figure of new jobs. Maybe not much more than 30 thousand a month. The quarterly average lies 29 thousand. Too late to act, as the offered president rama? Wall Street that stoods record in record thinks differently.
Fed: A meeting to rent balconies
The Fed meeting on Tuesday and Wednesday will be to rent balconies. But there are no more locations. Governor Lisa Cook, farewell by Trump, clung to her seat, thanks to a judicial ruling that keeps her in office with full powers. AND The governor Kugler’s renouncing seat will be occupied by a presidential envoy, Stephen Miran, who expects the Senate to grant his confirmation today. Trump will thus have a first -hand vision of the discussion within the institution. And also voice and vote? Miran has sworn its independence of criteria. Otherwise, its specifications would have been rejected. But he is an executive official, in use of a license until January, when his tasks will be reinstated as the main economic advisor of the president. Will you debut asking for a loss of half -point rates or not that license will be taken?
This meeting is lacking at all. The governor Chris Waller, one of the two Discolos in favor of the loss of rates in July, already anticipated his vote and reasons. It will reiterate its motion: a reduction of a quarter quarter. In facts, knowing that Powell is the one who cuts the cod but that will leave after May, Waller is listened to as a virtual Chairman in the shadows. Powell was silent lately. But he opened the door to a rate cut in Jackson Hole. And the data, which always has the last word, enables the Pacific Transit to a decision by consensus.
It was the data that also convinced the longest bonds to depose their weapons. When September began, in a tantrum up, 30 -year -old rates attacked the threshold of 5%. However, it was enough to spill the employment information and the hostilities ceased. Today they are below 4.70%. 10 -year -old rates closed at 4.07% after touching 4% on Thursday, their lowest level since October 2024. It is an intense green light. When Powell lowered the rates in 2024, the long rates climbed. The contrast could not be greater. The bonds warn the Fed that this time steps on insurance and can take the post. There are no Moors on the coast.
Source: Ambito
