Fed’s Barkin is on the wires saying:
- Baseline outlook for 2025 is positive, with more upside than downside risk to growth
- As long as employment and asset values remain strong, consumers will spend
- Inflation still not back to target, more work to do
- Story of 2025 will be less about monetary policy, more about economic fundamentals and perhaps geopolitics
- Fed is well positioned to respond regardless of how the economy develops
- Uncertainty in financial markets appears to have fallen, market-predicted policy path seems aligned with Fed median
- Increased understanding that long-term rates may not fall as much as had been hoped
- Labor market more likely to break toward increased hiring than toward layoffs
- There are some potential upside risks to inflation,
Comments are more hawkish, but aligned with the Fed rate decision from December 18. The good news is economy remains strong. The bad news is that inflation has not reached its 2% target. The Fed cut its forecast for rate cuts in 2025 to 2 from 4 previously.
US stocks remain higher:
- Dow up 200 points or 0.47% at 42589
- S&P index of 38.43 points or 0.66% at 5907.
- NASDAQ index up 169.61 points or 0.80% at 19451
- Russell 2000 up 19.87 points or 0.89% at 2251.59
The broader S&P and NASDAQ indices have been down for five consecutive days.
In the US debt market, yields are trading above or below unchanged along the yield curve:
- 2-year yield 4.251%, +0.4 basis points
- 5-year 4.380%, unchanged
- 10 year 4.573%, -0.2 basis points
- 30 year 4.793%, -0.4 basis points
