FED: Richmond's Barkin Doesn't Sound Opposed To A December Cut
Nov-18 16:59
Richmond Fed President Barkin (non-2025/2026 FOMC voter) concludes a speech Friday ("Operating with Limited Data") by saying that he's not guiding as to his policy preferences for the December FOMC meeting: "You may notice nothing I just said gives any guidance for our next meeting. That’s intentional, as I think we have a lot to learn between now and then."
- Barkin is almost always reluctant to reveal his rate policy views, so his lack of guidance is not a surprise, but we've considered him as being toward the neutral-to-hawkish-leaning side of the FOMC as he has expressed a generally sanguine view about risks to both the labor market and inflation. As such this latest commentary could be considered slightly dovish-leaning because, unlike some of his regional Fed president colleagues on the FOMC (including many who vote this year and next), he doesn't suggest he is necessarily opposed to a December cut.
- He says "on net, we are seeing pressure on both sides of our mandate, with inflation above our target and job growth down. But we also see mitigants on both sides, with consumer pushback and productivity improvements limiting inflation and labor supply slowing at roughly the same pace as labor demand, reducing the hit to unemployment....When the lighthouse [of data] goes dark, you might remain on your preexisting path at first, but soon enough, you will want to throttle back until you get more visibility. That’s not a particularly comfortable place to be, so I am looking forward to some illumination, from the data as it returns or from our outreach."
- Generally it sounds like his view hasn't changed considerably since mid-October, citing both private sector data and "what my team is hearing" from contacts. A few selected quotes:
- On activity: "Demand remains healthy....The elevated uncertainty that businesses perceived earlier in the year seems to be abating. But in our outreach, the feel is very different by sector."
- On the labor market: "While the unemployment rate has ticked up this year, it was still historically low at 4.3 percent through August. Employment growth, on the other hand, is soft."
- On inflation: "Inflation is still above target... On the positive side, shelter price growth is easing, and oil prices remain low; on the other hand, goods price growth has remained higher than its recent norms, and we are seeing some pressure in non-housing core services like insurance. We unfortunately have fewer quality alternative data sources for inflation, as it is easier to monitor the price of coffee than to assess the mix of price changes across the entire consumer basket. Our outreach leads me to believe inflation remains somewhat elevated but isn’t likely to increase much."
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LOOK AHEAD: US Week Ahead Headlined By Delayed CPI Report On Friday
Oct-17 20:51
- The September US CPI report will be released on Friday, delayed amidst the government shutdown but with the BLS making a special exception on social security payment considerations.
- Bloomberg consensus looks for headline CPI inflation at a rounded 0.4% M/M after 0.38% back in August and for Y/Y inflation to firm two tenths to 3.1% for what would be its highest since May 2024.
- Core inflation is seen at a rounded 0.3% M/M after 0.35% in August (exceeding the median unrounded estimate of 0.31%) and 0.32% in July. It’s expected to see core CPI inflation hold at 3.1% Y/Y having in August increased to its highest since February.
- Core details should see focus on both goods and services angles: underlying goods inflation has clearly firmed in recent months on tariff pressures although the median increase has currently seen a peak back in June, whilst services will be watched for any spillover after some strong recent non-housing readings.
- The report will come within the FOMC blackout period ahead of the Oct 28-29 decision, with a 25bp cut fully priced and likely needing a large surprise to alter this.
- As for broader inflation details, Fed Chair Powell this week confusingly suggested that we will have the September PPI report but the BLS had previously said “No other releases will be rescheduled or produced until the resumption of regular government services”.
US DATA: Latest Jobless Claims Estimates During The Shutdown
Oct-17 20:30
As noted earlier, MNI estimates initial jobless claims at a seasonally adjusted 218k in the week to Oct 11 and continuing claims at a seasonally adjusted 1929k in the week to Oct 4.
- To give a better idea of sensitivity around these estimates, which rely on estimates for some missing states, we note the below analyst estimates:
- Goldman Sachs have a central estimate of 217k for initial claims in a range of 211-225k, whilst they see continuing claims at 1917k in a range of 1885-1930k.
- JPMorgan meanwhile also see 217k for initial claims whilst they see continuing claims as having held constant at 1927k.
NATGAS: Venture Global in Talks with Ukraine for more LNG Deliveries, Reuters
Oct-17 20:28
Ukraine is seeking more cargoes from Venture’s Plaquemines facility as the embattled nation approaches the winter heating season, according to Reuters sources
- Venture is in talks with Ukraine’s DTEK to procure more LNG cargoes after a year of gas infrastructure attacks by the Russians.
- Venture Global CEO Michael Sabel met with President Volodymyr Zelenskiy on Thursday October 16.
- DTEK signed an agreement in 2024 for an undisclosed amount of LNG from the facility, as well as 2 mtpa from Calcasieu Pass Phase 2 currently under construction.
- Plaquemines currently has spare capacity to deliver more cargoes to Ukraine on the spot market, per Reuters.
- Plaquemines now sends out the second highest LNG volume in the US, with feedgas demand averaging 3.45 bcf/d according to MNI figures.
