FED: Powell Continues To Sound Caution On Labor Market (3/3)
Powell Cites “Negative” Payrolls: The other notable surprise was the degree to which Powell expressed concern over the state of the labor market (he maintained his upbeat tone on inflation). In explaining why the Fed cut now instead of waiting in January, he said that "in terms of inflation, it's coming in a touch lower" and the labor market cooling has continued.
- Most provocatively, he said that payrolls have been overstated and have actually been negative on an adjusted basis since April: "In October, I said that there was no certainty of moving. And that was indeed correct. I said it's possible you could think about it that way, but I was careful to say other people could look at it differently. So why do we move today? You know, I would say point to a couple things. First of all, gradual cooling in the labor market has continued. Unemployment is now up three tenths from June through September. Payroll jobs averaging 40,000 per month since April. We think there's an overstatement in these numbers by about 67,000 so that would be negative 20,000 per month. And also, just to point one other thing, surveys of households and businesses both show declining supply and demand for workers. So I think you can say that the labor market has continued to cool gradually, maybe just a touch more gradually than we thought."
- The implication is that even with lower labor supply, the Fed needs to be watching the labor market "very carefully: "Labor supply has also come down quite sharply. So if you had a world where there is just no growth in workers and you really don't need a lot of jobs to have full employment, some people argue that is what we are looking at. But I think a world where job creation is negative, I think we need to watch that situation very carefully, and be in a position where we are not pushing down on job creation with our policy."
Want to read more?
Find more articles and bullets on these widgets:
Historical bullets
JPY: USD/JPY - Consolidates Gains Above 154.00
The overnight range was 153.89 - 154.25, Asia is currently trading around 154.10. The pair has consolidated its recent gains above the 154.00 area. USD/JPY found solid demand around the 153.00 area on Friday again and this return of positive sentiment has brought the focus back to the 154-155 resistance area. A sustained break above here is needed to potentially see the uptrend regain upward momentum, through here the focus would then turn toward the 160 area where I would start to become wary of intervention risks.
- MNI INTERVIEW: BOJ Dec Hike Needed To Support Yen - Sakurai. The Bank of Japan should raise its policy rate 25 basis points to 0.75% at the Dec 18-19 meeting, as delaying a move would undermine its independence and risk further yen depreciation amid pressure from U.S. funds, former board member Makoto Sakurai told MNI. Markets have priced in a 49.8% chance of a hike next month.
- Sakurai, who maintains close contact with BOJ officials since leaving the board in 2021, said Takaichi’s dovishness also weighed on the bank's decisions. “The BOJ might have raised the rate in October if the prime minister wasn’t Takaichi,” he said, adding that concern over government reaction likely contributed to the bank’s decision to stay on hold last month.
- Options : Close significant option expiries for NY cut, based on DTCC data: none. Upcoming Close Strikes : none - BBG.
- Data/Event : BoP Current Account Balance, Eco Watchers Survey Current
Fig 1 : USD/JPY Spot Daily Chart
Source: MNI - Market News/Bloomberg Finance L.P
ASIA: Government Bond Issuance Today
- Hong Kong to Sell HK$19 Billion 182-Day Bills
- Hong Kong to Sell HK$65.365 Billion 91-Day Bills
- Bank of Thailand to Sell THB65 bn of 91-Days Bills
- Bank Indonesia to Sell 181D SVBI Bills
- Bank Indonesia to Sell 32D SVBI Bills
- Bank Indonesia to Sell 92D SVBI Bills
- Bank Indonesia to Sell 365D SVBI Bills
- Bank Indonesia to Sell 273D SVBI Bills
- Malaysia to Sell MYR5 Billion 2035 Bonds
- MAS to Sell S$14.4 Billion 28-Day Bills
- MAS to Sell S$2 Billion 252-Day Bills
- MAS to Sell S$22.3 Billion 84-Day Bills
- Taiwan to Sell NT$20 Billion 30-Year Bonds
- Philippines To Sell PHP 7.5Bln 182D Bills (PH0000060394)
- Philippines To Sell PHP 7.0Bln 91D Bills (PH0000059917)
- Philippines To Sell PHP 7.5Bln 364D Bills (PH0000061350)
- Indonesia To Sell 2030 Sukuk Bonds (PBS040)
- Indonesia To Sell 2039 Sukuk Bonds (PBS034)
- Indonesia To Sell 2028 Sukuk Bonds (PBS030)
- Indonesia To Sell 2049 Sukuk Bonds (PBS038)
- Indonesia To Sell 2041 Sukuk Bonds (PBS039)
- Indonesia To Sell 25D Sukuk Bills (SPNS08122025)
- Indonesia To Sell 172D Sukuk Bills (SPNS04052026)
- Indonesia To Sell 270D Sukuk Bills (SPNS10082026)
ASIA: Coming Up in Asia Today
| 0200GMT | 0900HKT | 1100AEDT | South Korea Exports 10 day YoY NOVEMBER |
| 0200GMT | 0900HKT | 1100AEDT | South Korea Imports 10 day YoY NOVEMBER |
source: Bloomberg Finance LP / MNI
