Macrocast: Powell's balancing act

·30 min·2 clips

The Fed held steady, but Powell isn't giving clues about future rate hikes, leaving markets on edge.

The episode opens with Brian DeAngelis hosting in place of Alain, introducing the week's key events: the Fed meeting and October jobs report. John describes the pre-meeting trepidation in Treasury markets, noting Powell's 'Hippocratic oath' approach of steady messaging. He explains how Powell downplaying the September dot plot was seen as dovish, shifting market focus to rate cut timing. Brian questions whether Fed uncertainty drives Treasury volatility, with 10-year yields swinging from 5% to 5.5%. John responds that this volatility is intentional—a feature of tightening financial conditions. Brendan outlines how high rates impact businesses and consumers, citing Harley-Davidson's weak sales and mortgage market slowdowns. The hosts predict a 2024 economic slowdown to 'stall speed,' with the Fed resisting premature cuts. John emphasizes the risk of an 'inflation echo' reminiscent of the 1970s if cuts come too soon. They analyze the October jobs report: 150,000 new jobs (adjusted for UAW strike), downward revisions, and a 3.9% unemployment rate. Brendan notes retail job losses and declining labor force participation as signs of consumer strain. Corporate earnings from Apple and Estee Lauder reveal slowing sales and China weakness. The discussion turns to U.S.-China relations, with John doubting Biden will offer concessions before the election. Brian raises the potential government shutdown, with John viewing it as a market non-event compared to debt ceiling crises. The hosts speculate on Fed challenges during the 2024 election, noting Trump's past criticism of high rates. The episode closes with a preview of a quieter upcoming week.

As heard by us

A grounded read on Powell's higher-for-longer stance and the jobs data putting it under pressure.

The Macrocast follows the Federal Reserve's balancing act after holding rates steady, with Brian DeAngelis back as guest host and John and Brendan parsing Powell's decision to keep another hike in play.

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Why you'd press play

You get Powell's higher-for-longer message, the jobs report's fine print, and a week to catch your breath.

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