FED: Chicago's Goolsbee: Labor Market Stable, Lack Of Inflation Data A Concern
Nov-06 14:00
Chicago Fed's Goolsbee (2025 FOMC voter) says his bank's October labor estimates (4.36% unemployment rate) are consistent with labor market "stability":
- "To me, most of the labor market indicators that we're getting show a lot of stability in the market....I still think there's mild cooling. But this labor market indicator reading that we put out from the Chicago Fed, that shows the unemployment rate is basically unchanged, except for a tiny increase that came from the workers who are not working because the government shutdown. And at that the hiring rate shows a lot of stability and the layoff and vacancy rate also shows a lot of stability. That's what it feels like on the labor side, so far, to me."
- He says that while there remains uncertainty about the degree to which downside risks exist in the labor market, the relative lack of inflation data leaves him uneasy about future cuts: "We have very little private sector information about inflation. ...If there are problems developing on the inflation side, it's going to be a fair amount bit of time before we see that, where if it starts to deteriorate on the job market side, we're going to see that pretty much right away. So that makes me even more uneasy, maybe, I'd say with front loading rate cuts and counting on the inflation that we have seen in the last three months to just be transitory and assume that they're going to go away."
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MNI: CANADA SEP IVEY PURCHASING MANAGERS INDEX 59.8 SA
Oct-07 14:00
- CANADA SEP IVEY PURCHASING MANAGERS INDEX 59.8 SA
FOREX: Markets May Be Erring in Favour of Larger RBNZ Cut; NZD Underperforms
Oct-07 13:56
The strong open for US equities alongside the retreat from highs for the US 10y yield has helped the USD edge off the day's best levels, an effect most evident in GBP/USD, which has recovered back above the 1.34 handle.
- The medium-term run higher in gold has continued, helping spot to new record highs of 3985.7 (although in futures space, COMEX gold has now shown above $4,000 for the first time), but the strength in gold looks pretty isolated: silver, oil prices and base metals are all seen lower, which may be limiting the bounce off lows for AUD/USD, which is yet to bounce back above 0.6600.
- NZD remains the underperformer into the RBNZ rate decision, and with 36bps of easing priced for Wednesday’s meeting and a cumulative 63bps by November, markets may be erring in favour of a more sizeable rate cut this week.
- A return lower for NZD would re-open upside in AUD/NZD through to 1.1355-67 resistance, clearance above which returns focus to the bull trigger and cycle high at 1.1418.
US DATA: Redbook Points To Robust Q3 Retail Sales Momentum, Official Data Or Not
Oct-07 13:42
Johnson Redbook Retail Sales rose by 5.8% Y/Y in the week ending Oct 4, bringing growth in the full month of September to 6.1% Y/Y (under their methodology, the month has 5 retail weeks). That's slightly softer than the 6.3% targeted by retailers but would still represent robust sales through the end of Q3.
- Additionally, their preliminary target for October growth (based on retailers' plans) is 5.7% Y/Y.
- It's still uncertain of course, but with every day of the federal shutdown that goes by, it's less and less likely we get the September Census Bureau retail sales report as scheduled on Oct 16.
- In the meantime we will be using proxies such as the Redbook index and the Chicago Fed CARTS index (which uses still-available data including payment card transactions, retail foot traffic, gasoline sales, and consumer sentiment to proxy retail sales ex-autos). These, plus Wards Automotive September sales, have all shown robust activity in the month consistent with a continued uptick in activity (a rough estimate is that nominal ex-autos/gas sales could post around 6% 3M/3M quarterly annualized growth for Q3, the strongest momentum seen since mid-2024).
- The Redbook report also notes: "As Amazon’s annual 48-hour Prime Big Deal Day sales kick off on October 7th, several major retailers have also announced significant promotional sales in advance of Prime Day. Discount stores have performed well throughout the week, buoyed by essentials such as food and household supplies. Looking ahead, October consists of four weeks, ending November 1st on the retail calendar, and includes two major holiday events: Columbus Day and Halloween."
