No Rate Cut Expected in December
During the recent Federal Reserve press event, Chairman Powell did not give a clear indication of a rate cut in December. This cautious approach, despite market expectations, is characteristic of Powell’s strategy, especially when the 10-year yield is at a yearly low. He aims to manage market expectations, even though the labor market is showing signs of softening.
While the market still anticipates a rate cut in December, Powell’s reluctance has created some uncertainty. If the economic indicators were different, Powell might have taken a different stance. However, with current low mortgage rates and declining yields, he chose to hold off on committing to a rate cut.
Labor Market Stability
Chairman Powell also emphasized that the labor market is not in crisis, citing job openings and jobless claims data as evidence. Despite concerns about the labor force growth slowing down, the data suggests a modest increase rather than a significant decline.
Although there is no recent government data on job numbers, private-sector reports and state-level jobless claims data indicate a slight uptick in unemployment. Powell remains focused on the labor market’s overall health, even as certain sectors like manufacturing and construction show signs of weakness.
As evidenced by the charts above, the labor market is facing challenges, particularly in industries like manufacturing and construction. Housing permits have also been on the decline, indicating a broader economic slowdown.
Final Thoughts
In conclusion, Chairman Powell’s cautious approach to a potential rate cut in December reflects his belief in waiting for more significant labor market challenges before considering a shift in monetary policy. The upcoming episode of the HousingWire Daily podcast will delve deeper into the Fed’s recent press event, providing more insights into Powell’s stance.