Labor Market The Signals: Consumer Price Index (Chart 1) On a m/m basis, Headline CPI rose by 0.39%, its third consecutive month posting sequential increases and marking its sixth month in a row above its 2015 to 2019 average pace of 0.15%. While the y/y trend has cooled from cycle highs made in 2022, the...Read More

Labor Market The Signals: Nonfarm Payrolls (Chart 1) Total nonfarm payrolls grew by 256,000 m/m, up from the 212,000 increase in the prior month, with private industries accounting for 223,000 of that total for December. The m/m change was led by Education & Health Services at 80,000, Trade, Transportation & Utilities at 49,000, and Leisure...Read More

Inflation and Monetary Policy The Signals: ISM PMI Prices (Chart 1) These sentiment indicators survey business activity across several industries in the manufacturing and services space. Survey respondents are asked whether a given measure was better or worse (or higher or lower) compared to the prior month with a reading above 50 indicating expansion and...Read More

Coming into the second half of the year, our expectations were for the breadth of earnings growth to expand as the comparison sets for small cap companies eased. The follow-on effect of this positive rate of change would lead to low layoff numbers and a reduction in the amount and pace of rate cuts implemented...Read More

The Consumer Price Index accelerated by 0.2% m/m in October, pushing the y/y growth rate up to 2.6% from 2.4%. We have been writing about the rising probability that CPI growth would move higher in the fourth quarter as the shelter contribution remained elevated and the comparison set for energy reversed. The October data confirmed...Read More

Real GDP growth slowed in 3Q24, but remained positive, largely driven by a rate of change acceleration in consumer goods spending. In y/y terms, Real Personal Consumption Expenditures (PCE) accelerated to 3.0% from 2.7% in the prior quarter. Real Goods PCE accelerated to 2.8% y/y from 2.1%, and Real Services PCE accelerated to 3.1% y/y...Read More

First estimates for 3Q24 GDP have been released for a few of the key countries we monitor closely. While U.S. GDP growth slowed y/y as expected, European data mostly improved in rate of change terms, also as expected. The high-level takeaway is that growth did not move in a direction that is conducive to the...Read More

We have been writing about our expectations that rate cuts from the FOMC would be pushed out as inflation stays higher than expected, growth avoids recessionary levels, and labor market activity moderates to pre-pandemic averages. Focusing on the labor component of that setup, our view was that the corporate earnings backdrop likely would not weaken...Read More

We have been monitoring the inflation setup closely given its potential impact on the path of interest rates and monetary policy over the next few months. A re-emergence of higher Headline inflation prints could lower the pace and magnitude of rate cut expectations and keep the long end of the Treasury yield curve elevated. Last...Read More

For the last few quarters, we have highlighted the rising probability that inflation would reverse its downward trend in the fourth quarter, resulting in rate cut expectations being pushed out. On Thursday we will get an update on the Consumer Price Index and while the base effect setup is pointing toward another y/y deceleration, U.S....Read More