Today starts the three day Jackson Hole Meeting where central bankers from around the world speak. Powell talks Friday at 10am ET.
Later today, we’ll see a 20-year bond auction, a routine event, but one worth watching. The key factor is demand: strong demand pushes bond yields lower, and mortgage rates typically follow suit.
Q3 GDP outlook is all over the map, with estimates ranging from -0.3% to 2.3%. The wild card? Trade and tariffs, and how they ultimately shake out. A weaker GDP print would put added pressure on the Fed to cut rates.
One of the biggest criticisms of Powell is his obsession with being “data dependent.” The problem is that economic data, by definition, is backward-looking. Relying on it to make forward policy decisions is like trying to drive while staring only through the rear-view mirror, you see where you’ve been, but not where you’re going. By the time the Fed reacts, the road ahead has often already changed.
My take:
The job market right now is essentially treading water, neither adding nor subtracting in any meaningful way. That’s a sharp contrast from just a few years ago, when employers were competing aggressively for new hires. The real concern going forward is whether we start to see the employment pool shrink, which would signal a much deeper shift.
Its time for the FED to turn around and look through the windshield.
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