More No-Landing Evidence
The latest Atlanta Fed's GDPNow nowcast, out today, has Q3 real growth at 3.4%, the highest this quarter.
The last GDPnow update for Q3 is tomorrow (housing starts). Q3 GDP is out on October 24.
The robust Q3 GDPow follows the economic data we have seen this quarter.
The following chart is the Bloomberg Surprise Index. It has risen since late August, signifying that the data is improving relative to expectations.
Why is the data doing better than expectations?
The vast majority think we will have a "soft landing" (blue), as the October BofA Global Fund Managers surveys (released this week) show.
Yet, we are not getting a soft landing. The data has been solidly in "no landing" territory.
What does this mean for markets?
A fear that the Fed is making policy mistakes by stimulating an economy that does not need it.
As the blue line shows, this is the most significant rise in the 10-year yield after the first cut in at least 35 years.
The bond market is afraid the Fed is creating inflation.
See what the 10-year inflation breakeven rate has been doing since the Fed cut rates on Sept 18.
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3 个月What will happen to the economy when 10,000,000 plus people are removed from the American economy and the Federal Government is no longer funding their lifestyles?
North American Credit Manager / Senior Analyst at Marubeni America Corporation
4 个月the only time in the history of the FED where we had 50 bps cuts was when there was an underlying crisis. the banks are sitting on unrealized losses in CRE that’s are 7 times greater than 2008. every dollar printed devalues every dollar in existence. the FED is toast. they made their mess. let them go.
Associate Director, Institution Risk at (FDIC)
4 个月Would be timely for a piece on the consequences of no-landing: inefficient allocation of capital, economic uncertainty, above target inflation, fiscal irresponsibility, lackluster private sector investment.
Principal/Owner at Visiting Angels of Western North Carolina and Visiting Angels of Catawba valley
4 个月Fed should not have cut by 50 but maybe 25. I think it was premature because in my neck of the wood i don’t see any sign of a slowing economy
Tutoring, Mentoring and Consulting
4 个月So we've got real GDP growth running around 3%, which means nominal GDP growth is going to be 6ish. Shouldn't nominal rates be higher than that? Why is everybody calling for cutting. Rates are too low because the Federal Reserves balance sheet is too large and heavily skewed to Long dated that