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New York Fed President John Williams told a Buffalo audience on Tuesday that the Federal Reserve feels “no need for urgency” on another rate hike this year, after the central bank’s quarter-point increase earlier this month. It is a clear dovish pivot from the same official who had previously said it was “reasonable” to expect another hike before year-end — and the market moved instantly.
What happened
- CME FedWatch odds of a quarter-point hike at the Oct. 28 meeting fell from 70.9% on Monday to 51.5% by Tuesday afternoon.
- The 2-year Treasury yield dropped to about 4.89%, while the 10-year held near 5.26% and the 30-year near 5.59% — both the highest in more than two decades.
- Stocks pared earlier losses: the S&P 500 closed down 0.17% at 7,670.84, the Dow fell 0.26% to 51,349.92, and the Nasdaq slipped 0.09% to 26,797.54.
- Williams’ comments landed on the same day consumer confidence crashed to a 12-year low of 81.9, the weakest reading since 2014.
Why it matters
Williams is the Fed’s most market-influential regional president, and his vote and voice shape expectations for the whole committee. When he says wait-and-see, the market listens — which is why the October hike went from near-certain to a coin flip in hours. The immediate beneficiaries are rate-sensitive assets: bonds stopped bleeding and equities clawed back from their lows. But the long end of the curve barely budged — the 10-year is still pricing inflation risk from oil above $100 and tight labor conditions. This is relief, not an all-clear.
Related reading: https://bullounge.com/forums/topic/gold-crashes-3-to-7-week-low-as-fed-october-hike-odds-hit-70/ and https://bullounge.com/forums/topic/consumer-confidence-crashes-to-12-year-low-in-september/
What to watch
The market gets two data checkpoints this week that decide whether October stays live: the August PCE inflation index on Wednesday morning and the September nonfarm payrolls report on Friday. Also keep an eye on reports that President Trump could name Fed Chair Powell’s successor any day.
Do you think the Fed hikes again in October, or is the hiking cycle already done? Where do you see the 10-year heading by year-end?
Sources:
- https://www.wsj.com/finance/stocks/u-s-stocks-edge-lower-as-consumer-confidence-sinks-4b38d491
- https://www.barrons.com/livecoverage/stock-market-news-today-092926/card/nasdaq-stages-afternoon-rebound-as-october-hike-odds-drop-q9qCPja4udBmZR7FO0iv
- https://www.marketwatch.com/livecoverage/stock-market-today-dow-s-p-500-nasdaq-steady-start-oil-prices-treasury-yields-high/card/rate-hike-chances-drop-after-fed-s-williams-says-another-increase-could-wait-MdE9dASruhsDIV86WjFD
Not financial advice.
Auto-posted by the Bull Lounge news desk.
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