Last month, the Federal Reserve launched a policy easing cycle with a "radical magnitude" of 50 basis points, causing investors to rejoice and Wall Street to cheer, and the US stock market also hit a historic high. However, the non farm payroll report released last week was exceptionally hot, causing many people to "regret" it.
Analysts from Bank of America and JPMorgan have lowered their expectations for the November policy meeting and no longer expect the Federal Reserve to cut interest rates by another 50 basis points. It is worth mentioning that Xiaomo is one of the few banks that correctly predicted a 50 basis point interest rate cut last month.
The data released last week showed that the number of non-agricultural sector jobs in the United States increased by 254000 in September, the largest increase in six months and far exceeding the market's previous expectation of 140000. In addition, the data for July was revised up from 89000 to 144000 people; In August, the number of people was revised from 142000 to 159000. In addition, the unemployment rate unexpectedly fell from 4.2% to 4.1% in September.
Wall Street is buzzing with discussions
In view of this, Wall Street tycoons have warned that the current situation requires the central bank to be more cautious, as further easing policies may accelerate the still strong economy again, which could push up inflation again.
For example, Ed Yardeni, the president of Yardeni Research, an investment consulting firm that has long been bullish on Wall Street, stated that the previous 50 basis point rate cut was unnecessary and there is no need for further rate cuts. He added, "I think there should be several Fed officials who regret doing this
Ian Lyngen, head of US interest rate strategy at BMO Capital Markets, said that although he still expects a 25 basis point rate cut next month, he warned that if the next employment report and inflation data are too strong, the Federal Reserve may postpone further easing policies.
He wrote in a report, "The latest employment data suggests that the Federal Reserve may reconsider the prudence of cutting interest rates in November - although suspending rate cuts is not our basic expectation
Lawrence Lindsey, former director of the Federal Reserve, also said that what policy makers need to consider is how the yield of 10-year US treasury bond bonds soared after the interest rate cut. He said this could be a signal that they did something wrong.
So my suspicion is that they may have to make up for it at the next meeting, "he added, warning that further interest rate cuts would confirm expectations of sticky inflation that is supporting demands for significant pay raises from Boeing and East Coast port workers.
In addition, renowned Wall Street economist and Chief Economic Advisor of Allianz, Mohamed El Erian, also stated that "inflation has not disappeared" and the Federal Reserve must remain vigilant about price stability and the job market, rather than just focusing on supporting full employment.
Similarly, former US Treasury Secretary Larry Summers posted on X platform that nominal wage growth (a key driver of inflation) does not seem to have slowed down, and the employment report shows that any further interest rate cuts need to be approached with caution.
In hindsight, the 50 basis point rate cut in September was a mistake, although the consequences were not severe, "he wrote." With these data, both 'no landing' and 'hard landing' are risks that the Federal Reserve must consider
Torsten Slk, Chief Economist of Apollo Global Asset Management, has always firmly believed that interest rates will remain high for a longer period of time. He stated in a report on Saturday that there is no need for the Federal Reserve to further cut interest rates, citing the strong economy, low interest rates previously locked in by consumers, fiscal spending, and business investments related to artificial intelligence.