Benzinga's PreMarket Prep is the #1 go-to source for everything you need to know before the market opens! Join our expert hosts as they break down the latest market trends, analyze key indicators, and provide actionable insights to help you navigate the trading day ahead. Join us for free every market day live on YouTube from 8AM ET.
Category
🗞
NewsTranscript
00:00What if, and we're going to have you on next week, what is if this inflation, this transitory
00:06that turned into super hyperinflation, what if they just blow the numbers off next week?
00:12I mean, they were pretty good.
00:13I mean, we've had a lot of inline stuff.
00:16I mean, even that, is that not going to change things?
00:20The inflation data is way more stable than the jobs data.
00:25So a surprise in inflation is highly unlikely.
00:29I mean, you know, everything's possible, but the odds on a big upward surprise in inflation
00:37are down in the 1%, 2% territory, they're very, very low.
00:42And if it did happen, I think the Fed would say it's a one month blip, and there'd probably
00:46be some explanation for it.
00:49But since I don't have the explanation in advance, I actually don't think it'll happen.
00:54By the way, this chart just shows that the Fed funds futures, the CME Fed funds futures
01:00are talking about a whole sequence of rate cuts, all the way down to 3% by the end of
01:05next year.
01:07I don't know that that's going to change very much based on this number.
01:13You know, where the Fed's talking about getting back to some kind of neutrality, I don't know
01:19where that number is.
01:20I don't think they do either.
01:22But it's probably between 3 and 1 half and 4, maybe not all the way to 3.
01:27So we're looking at a sequence of rate cuts.
01:30How many, I mean, do you think there will be at this point?
01:33I think you need the next chart.
01:36This is trying to figure out how many rate cuts are between now and the end of the year,
01:42end of 2024.
01:44And the Fed funds futures has 425% 25 basis points.
01:49So that's a full percentage point.
01:51I think this expectation may shift a little bit based on this number.
01:59The jobs, again, we're continuing to grow the economy, so there's no rush to cut.
02:06And so I really do not think the Fed will do anything in their November meeting.
02:14It's two days after the election.
02:15We may not even know the results.
02:17The last thing they want to do is be in the headlines that week.
02:21In fact, I'm surprised they're even holding the meeting.
02:27So you get a cut in September, you skip the first week in November, and then you cut again
02:32in December.
02:33So that's only 50 basis points.
02:35So on this chart, that would be a minus 2, 2 cuts.
02:40So I'm looking for some change in expectations.
02:43But when you go out a year or a year and a half, I don't think expectations change
02:48that much.
02:49So it's just the starting point is a little slower than some people were thinking.