MacroEdge 9/22 Weekly Ozone Report: Welcome to Fall, 50BP Optimism Begins, Vision Update, Restaurant Industry Deep-Dive, Gold, and More
In this weekly report - the MacroEdge Team dives into the latest trends impacting our financial and economic markets - from 'nirvana-like' optimism around a 50bp rate cut, to gold, and more.
Welcome to Fall: 50BP Optimism Begins, Staying Focused on Employment (@DonMiami3, MacroEdge Chief Economist)
Good Sunday evening all,
Another week behind us means we’ve officially started the Fall season. As most of us are now aware - the Fed began this latest easing cycle with a 50bp rate cut, kicking off a new easing cycle, and the first in 4 years since the pandemic lockdowns saw the Fed and other Central Banks around the globe drop rates to zero or near zero. The story of lower rates wasn’t the same one globally, with the Bank of England and BoJ both holding rates. We are likely to see the Bank of Canada tee up a 50bp rate cut as a possibility now, and this highlights some of the growing asynchronicity between global Central Banks. This evening because we have some great points to add from the team on everything from the restaurant sector to gold, we’ll keep the top piece shorter and focus on the state-level employment data release from last week, and continued optimism on 50bp cuts, which I do not share.
As we expected last week, the reaction to the 50bp rate cut has been positive in the markets so far (and among industry leaders as well), which has been common behavior for ‘first 50’ cuts dating back to 2000. 50 basis point rate cuts are not common, particularly as first cuts, with just 4 instances in the last 39 years that we can look at for meaning and interpretation, as the Federal Reserve often prefers to start easing cycles with 25bp cuts. Part of the Fed’s choice for 50bp was its now acknowledged ‘policy error’ that we spoke on at length through the Summer, holding rates too high for too long causing pretty substantial damage to the labor markets, which is now the mandate in focus. Inflation (which yes is still above target and was monumentally destructive to the lower and middle classes) from 2021-present, has now taken the backseat concern to employment and I anticipate that this focus will remain on employment for a pretty significant period going forward.
With that being said, we’ll dive into the latest data and have more on RESights in the coming week as our team develops our newest line of excellence covering all things RE sector.
