Week #13 — Market Update for March 25-29, 2024

Executive Summary

The major U.S. stock indices exhibited mixed dynamics, with the S&P 500 Index being affected by declines in the technology sector in general and by several of the 'Magnificent Seven' participants. The European Union has initiated a comprehensive investigation into tech giants Apple Inc., Alphabet Inc.'s Google, and Meta Platforms Inc., examining their compliance with the new Digital Markets Act, which aims to curtail Big Tech's power. The investigation could impose fines up to 10% of the companies' global revenue, potentially doubling for repeated offenses. The probe specifically focuses on Apple and Google's app store policies, Google's search result preferences, Apple's browser choice limitations, and Meta's implementation of new subscription fees for Instagram and Facebook.

Despite this, the broad sentiment was positive—the S&P SmallCap 600 Index rose by 2.6%, a segment that is generally seen as a risk-on proxy. Meanwhile, Bitcoin surged by almost 11% after a decline last week.

Globally, stock markets generally followed the upward trend of the U.S. market.

The New York Fed Staff Nowcast model slightly lowered its U.S. GDP growth forecast for Q1 2024 to 1.87% from 1.90% a week ago, as a small positive surprise from personal consumption data was offset by a negative impact from data revisions. In contrast, the Atlanta Fed's GDPNow model increased its estimate upward to 2.3% from 2.1%.

Market expectations regarding the Federal Reserve's forthcoming actions have shifted, with the likelihood of the first rate cut in June decreasing to 63.6% from 75.6% a week ago.

In the bond market, the U.S. Treasury yield curve stayed relatively stable, with 10-year bond yields falling by 2 basis points to 4.20%, and 30-year bond yields falling by 5 basis points to 4.34%.

For a more detailed understanding and context, it is recommended to refer to the full article.

US Stock Market

The major U.S. stock indices exhibited mixed dynamics, with the S&P 500 Index being dragged down by declines in the technology sector in general and by several of the 'Magnificent Seven' participants. The European Union has launched a comprehensive investigation into tech giants Apple Inc., Alphabet Inc.'s Google, and Meta Platforms Inc., examining their compliance with the new Digital Markets Act, aiming to curtail Big Tech's power. The investigation could result in fines of up to 10% of the companies' global revenue, potentially doubling for repeated offenses. The probe specifically targets Apple and Google's app store policies, Google's search result preferences, Apple's browser choice limitations, and Meta's introduction of new subscription fees for Instagram and Facebook.

Despite this, the broad sentiment was positive—the S&P SmallCap 600 Index rose by 2.6%, a segment generally seen as a risk-on proxy. Meanwhile, Bitcoin surged by almost 11% after receding last week.

In terms of sector performance, nine out of eleven sectors exhibited positive dynamics, with the remaining two exhibiting a decline.

The Fear & Greed Index, which measures market sentiment, slightly decreased to 71 from 72 a week ago.

SPY, the ETF that tracks the S&P 500 Index, marked another record high. As I have mentioned before, the market seems very overbought, from a technical analysis perspective, which makes the continuation of the rally unreliable.

Global Markets

Global stock markets generally mirrored the U.S. trend.

The ACWX ETF, representing the MSCI All Country World Index excluding the USA, has climbed higher, with some momentum indicators signaling a coming overbought condition.

Economic Indicators, Statistics and News

Several important macroeconomic indicators and economic news were published during the week:

Global

US

·????? The US housing market is experiencing a mix of trends, with new-home sales unexpectedly declining in February, marking the first drop in three months. The annual pace of new single-family home purchases fell by 0.3% to 662,000, contrary to the anticipated rate of 677,000. Despite this setback, there are signs of a sustained recovery, as mortgage rates stabilize and builders offer incentives, supported by a strong job market. The median sales price of new homes saw a significant reduction, declining by 7.6% year-over-year to $400,500 in February, with the supply of new homes reaching its highest point since October 2022.

Conversely, home-price growth in the US has accelerated, with national prices climbing by 6% in January year-over-year, marking the fastest rate since 2022. This growth has intensified pressure on buyers, especially in a market still grappling with high borrowing costs and a tight supply of listed homes. Certain cities like San Diego and Los Angeles have seen even more substantial price increases.

The market for previously-owned homes shows signs of improvement, with pending sales recovering last month after a decline at the beginning of the year. An index of contract signings rose by 1.6%, indicating a gradual improvement in the housing market. However, the Federal Reserve's stance on interest rates, with some officials advocating for keeping rates higher for longer to combat inflation, adds an element of uncertainty.

Mortgage rates have slightly decreased, providing some relief to homebuyers facing affordability challenges. The average rate for a 30-year fixed loan dropped to 6.79%, offering hope for a steadier market momentum as more homeowners list their properties for sale. This adjustment in mortgage rates, coupled with an increase in existing-home sales and a more favorable inventory level, suggests potential for further market improvement, although the overall rates remain high compared to early 2022 levels.

·????? In March, US consumer confidence exhibited a mixed picture, with overall sentiment holding steady amidst varying outlooks on the current situation versus future expectations. The Conference Board's gauge of consumer sentiment marginally declined to 104.7 from a downwardly revised 104.8 in the previous month, slightly below economists' expectations of a 107 reading. While the gauge for current conditions improved to 151, indicating a more positive perception of the present situation, the expectations measure dropped to 73.8, marking its lowest point since October.

Despite recent improvements in consumer confidence, factors such as high prices, increasing borrowing costs, and a cooling labor market are impacting Americans' purchasing power and optimism. Concerns regarding the political environment, particularly with the upcoming election, have also become more pronounced, leading to a somewhat stagnant sentiment across different income and age groups.

Contrastingly, the University of Michigan's sentiment index showed a notable increase towards the end of March, supported by strong stock market performance and diminishing inflation expectations. The index reached 79.4, its highest since mid-2021, with a significant intramonth rise of 2.9 points, the largest since August 2022.

Inflation expectations for the next year adjusted slightly to 2.9% from 3%, with a longer-term outlook of 2.8% over the next five to ten years, the lowest since September. This reduction in inflation expectations and uncertainty suggests a growing consensus among consumers that inflation will continue to slow.

The improvement in sentiment was observed among both Republicans and Democrats, although it declined for independent voters. Consumers expressed increased satisfaction with their current personal finances and a more optimistic present outlook for the economy, buoyed by the S&P 500 index reaching record highs. Both the current conditions gauge and the expectations measure rose to their highest levels since mid-2021, indicating a stabilization in sentiment as consumers await further economic direction in light of the impending presidential election.

·????? The US economy demonstrated robust growth towards the end of last year, with Gross Domestic Product (GDP) rising at a revised annualized pace of 3.4% in the fourth quarter, surpassing the earlier estimate of 3.2%. This growth was supported by increased household demand and business investment. Additionally, Gross Domestic Income (GDI) saw a significant increase of 4.8%, marking the most substantial rise in two years. The average increase between GDP and GDI in the fourth quarter reached 4.1%, the highest in two years, providing a strong indicator of economic expansion.

Consumer spending, a critical driver of GDP, grew at a 3.3% rate, fueled by higher expenditures on healthcare and financial services, despite a revision in goods outlays. Investment in nonresidential sectors also saw a notable uptick, with spending on structures, intellectual property, and equipment all revised upwards. Inflation, as measured by the personal consumption expenditures price index, rose at a slower annual rate of 1.8% in the fourth quarter, the lowest since 2020.

Economists have become more optimistic about the US economic outlook, projecting a 2.2% growth for the year, which is more than double the growth anticipated in September and slightly lower than the 2.5% figure for the previous year. The likelihood of a recession has decreased to 35%, a significant drop from 55% in September. This positive outlook is supported by expectations of strong job gains, leading to increased consumer spending, which is crucial for the US economy.

Employment is expected to rise by an average of 150,000 jobs per month in 2024, driving a 2% increase in household spending. Private investment is also forecasted to grow by 2.4% this year, reflecting a positive outlook for economic activity.

Despite recent strong inflation data, economists predict that price rises will moderate, with the core personal consumption expenditures index expected to average 2.5% in 2024. This moderation in inflation is anticipated to prompt the Federal Reserve to begin reducing interest rates by June, with two more rate cuts expected before the year's end.

·????? In February, the Federal Reserve's preferred measure of underlying inflation, the core personal consumption expenditures (PCE) price index, showed a cooling trend, rising by 0.3% from the previous month, a decrease from January's 0.5% gain. This deceleration in inflation, particularly in a more narrow gauge of services excluding housing and energy, which increased by only 0.2% from the prior month, offers some relief to Fed officials concerned about persistent price pressures. This inflation metric is crucial as it tends to be more stable and is closely monitored by the Fed.

Concurrently, consumer spending adjusted for inflation surged by 0.4% in February, significantly surpassing economists' expectations and marking the largest increase in wages in over a year. This robust consumer activity, especially in services like international travel, transportation, and financial services, contrasts with the high borrowing costs and the ongoing inflation challenges, suggesting a resilient labor market continues to underpin household demand.

·????? The New York Fed Staff Nowcast model slightly downgraded its U.S. GDP growth forecast for Q1 2024 to 1.87% from 1.90% a week ago, as a small positive surprise from personal consumption data was offset by a negative impact from data revisions. In contrast, the Atlanta Fed's GDPNow model revised its estimate upward to 2.3% from 2.1%.

Europe and Asia

·????? The ECB is poised to allow Greek banks to distribute dividends to their shareholders for the first time in over a decade, marking a significant turnaround from the financial constraints following the global financial crisis and Greece's subsequent debt crisis that began in 2010. This decision comes as Greek banks have shown considerable improvement by reducing non-performing loans and bolstering their financial health. The Greek economy's gradual return to stability and the recent upgrade of the country's debt to investment grade status last year have also contributed to this positive shift. Although the anticipated shareholder payouts are expected to be lower than what the banks had initially planned, this move is seen as a vote of confidence in the Greek banking sector's recovery.

The four major Greek banks—Eurobank Ergasias Services and Holdings SA, Piraeus Bank SA, National Bank of Greece SA, and Alpha Bank SA—have already factored in dividend payments for this year in their financial planning, subject to approval from regulatory authorities. The ECB's final decision on the payouts is still under review, with considerations including the banks' capital projections and the impact of potential declines in interest rates on their earnings.

·????? Economic confidence in the Euro-area saw an improvement, hinting at a potential shift away from the recent economic sluggishness experienced in the region. According to a sentiment indicator released by the European Commission, the confidence level ascended to 96.3 in March, slightly surpassing the expectations set by economists in a Bloomberg survey. Notably, the industrial confidence index experienced an unexpected rise, contributing positively to the overall sentiment. Meanwhile, the confidence in the services sector also increased, albeit at a lesser magnitude than anticipated. Additionally, consumer sentiment showed an improvement, further bolstering the positive outlook for the Euro-area's economic resilience and potential recovery.

·????? France's budget deficit widened significantly in 2023, casting doubt on President Emmanuel Macron's ability to manage the country's fiscal issues effectively. The deficit grew to 5.5% of the country's GDP, up from 4.8% in the previous year, and exceeded the government's projection of 4.9%. This increase is attributed to a slowdown in tax revenue growth as France's economy, the second-largest in the euro area, stagnated. Meanwhile, the growth in government spending only saw a slight reduction, as reported by the national statistics agency, Insee.

This fiscal slippage poses a challenge to Macron's reputation as an economic reformer, especially considering his track record of meeting or surpassing fiscal targets in his first term, except during the pandemic. The 2023 deficit raises questions about Macron's strategy of relying on growth-enhancing reforms, such as labor market liberalization and pension reforms, to improve public finances without resorting to austerity measures or tax hikes.

Facing a potential backlash from voters and with his party lagging behind in polls, Macron has promised tax cuts for lower-income workers next year, making the prospect of tax increases or significant spending cuts politically sensitive. The Finance Ministry has already announced plans for €10 billion in savings this year and anticipates a need for an additional €20 billion in savings for the 2025 budget to steer the deficit towards the government's target.

Finance Minister Bruno Le Maire has reaffirmed the goal to reduce the deficit below the EU's 3% limit within three years and has called for additional savings from state agencies. He has also invited opposition lawmakers to discuss possible budget cuts for 2025, emphasizing the importance of fiscal responsibility over allowing debts and deficits to rise unchecked.

Some of Macron's allies have suggested reconsidering the "no-tax-increase" stance that has been central to his pro-business agenda. The government is considering stricter enforcement of taxes on windfall profits from energy companies but remains opposed to broad tax increases, focusing instead on reducing government spending.

The growing fiscal concerns have drawn increased scrutiny from rating agencies, with Fitch Ratings downgrading France's credit rating and S&P Global Ratings assigning a negative outlook. Bank of France Governor Francois Villeroy de Galhau has also expressed concern over the country's persistent fiscal challenges, warning of the long-term implications for France's credibility in Europe.

·????? Inflation in France significantly decreased to 2.4% in March, marking the first time in two and a half years that the figure has fallen below 3%. This decline was more pronounced than the anticipated 2.8% predicted by economists. Meanwhile, Italy, another major economy within the euro area, reported a lower-than-expected inflation rate of 1.3%, an increase from February's 0.8% but still below the forecasted 1.5%. These developments are indicative of a broader trend within the European Central Bank's jurisdiction, which has led to considerations for interest rate reductions.

The inflation slowdown in France, the euro area's second-largest economy, was driven by reduced price increases across various sectors including food, energy, manufactured goods, and services. For instance, services inflation in France eased to 3% in March from 3.2% in February, and the price growth of manufactured goods slowed to 0.1% from 0.4%.

While these disinflationary trends are generally positive, they present a mixed scenario for the French government. On one hand, slower inflation has negatively impacted tax revenues, exacerbating the budget deficit. On the other hand, the government views the easing of inflationary pressures as a potential catalyst for economic revival, especially given the country's recent economic stagnation.

French Finance Minister Bruno Le Maire expressed optimism about the decline in inflation, highlighting its significance for citizens' purchasing power and expenditure on essentials like food. He regarded the latest inflation figures as indicative of success in the battle against inflation, emphasizing the relief it brings to consumers.

·????? Consumer sentiment in Germany is expected to continue its slow recovery in April, supported by a decrease in the propensity to save among households, despite ongoing uncertainties about the country's economic future. The GfK and the Nuremberg Institute for Market Decisions reported a slight increase in the consumer sentiment index to -27.4 from -28.8 in March, indicating a more positive outlook than analysts had anticipated.

However, Germany's economic growth projections remain subdued, with expectations for 2024 showing only a marginal increase in output of 0.1%, significantly down from a previously forecasted 1.3% expansion. This sluggish growth is attributed to a combination of cyclical and structural factors, including delayed private consumption recovery, weak demand for German goods abroad, and uncertainty impacting corporate investments. Some economic indicators suggest a potential turnaround, but the overall momentum is expected to remain weak.

Germany was the only G7 economy to contract last year and is projected to be the slowest-growing economy within the group again this year. The country's economic model, heavily reliant on cheap Russian gas and a strong export sector, has been challenged by the cut-off of Russian gas in 2022, which contributed to inflation and cost-of-living pressures. Although wholesale gas prices have returned to 2018 levels and Germany's international competitiveness shows signs of recovery, concerns about deindustrialization and structural weaknesses persist.

On a positive note, German unemployment rose less than expected in March, with a minimal increase of 4,000 jobless claims, indicating resilience in the labor market. This resilience, however, has yet to translate into a significant rebound in consumption, as evidenced by a continuous decline in retail sales.

·????? The UK economy experienced a shallow recession in the latter half of 2023, posing a significant challenge for Prime Minister Rishi Sunak as he prepares for an election anticipated later this year. According to the Office for National Statistics (ONS), the British economy contracted by 0.1% in the third quarter and 0.3% in the fourth quarter, confirming initial estimates. However, the overall recession for the second half of the year was slightly less severe than initially thought, with GDP decreasing by 0.4% instead of the previously estimated 0.5%.

This economic downturn has been a point of contention for Sunak, especially with the opposition Labour Party, which is leading in opinion polls, attributing the recession to his policies and dubbing it "Rishi's recession." Despite the challenging start to the year, economic forecasts suggest that growth in 2024 might be under 1% due to the economy's weak performance in early 2023. Nevertheless, there is optimism for an acceleration in economic momentum within the year, bolstered by tax reductions announced by Finance Minister Jeremy Hunt and anticipated interest rate cuts.

In contrast to the gloomy GDP figures, UK living standards saw improvement at the end of 2023, reaching their highest level in more than two years. This rise was facilitated by a reduction in inflation and significant wage increases. Real household disposable income per head grew by 0.4% in the fourth quarter of 2023, overturning a 0.3% decline from the previous quarter and marking the highest per capita income since the third quarter of 2021. This period was before households faced financial strains from energy price shocks and double-digit inflation, with overall disposable incomes seeing a 0.7% increase.

·????? Consumer price growth in Tokyo has shown signs of moderation while remaining significantly above the central bank's inflation target, hinting at a sustained pressure for potential interest rate hikes. The price increase excluding fresh food slowed to 2.4% in March from 2.5% in February, aligning with economists' forecasts and acting as a precursor to national trends expected on April 19. A more comprehensive analysis that excludes both fresh food and energy prices showed inflation slowing to 2.9%. Service price gains also witnessed a slight reduction, moving to 2% from 2.1% the previous month.

In a related development, Japan's decision to phase out utility subsidies by the end of May is poised to drive inflation towards 3% over the summer, presenting a complex scenario for the BOJ's interest rate strategy. The termination of electricity and gas charge subsidies, contrasted with the continuation of gasoline subsidies, is anticipated to elevate the key inflation gauge by approximately 0.75 percentage points between May and July. This policy shift is expected to intensify the cost-of-living pressures for households, which have already seen a reduction in real-term spending, thereby exerting a drag on the economy. The ripple effect of higher energy costs is likely to permeate throughout the economy, potentially altering the underlying inflation trend and influencing inflation expectations.

·????? In the first two months of the year, China's industrial companies saw a 10.2% increase in profits from the previous year, marking a continuation of the positive trend since August and signaling a strengthening of the world's second-largest economy. This rise in industrial profits, as reported by the National Bureau of Statistics, was attributed to rebounding foreign demand and policy stimulus by Beijing, despite ongoing deflationary pressures from a property slump and subdued domestic confidence. Notably, the manufacturing and utilities sectors led the gains, with 29 out of 41 main industries experiencing profit increases.

Concurrently, President Xi Jinping engaged with American business leaders in Beijing, including notable figures from Blackstone Inc. and Qualcomm Inc., aiming to boost confidence in the Chinese economy and maintain stable US-China relations. During this meeting, Xi expressed a desire for continued American investment in China and addressed domestic economic issues, emphasizing that China's economic growth has not reached its peak. This dialogue comes at a time of fluctuating US-China relations, with both nations navigating trade disputes, cyberattack accusations, and broader geopolitical tensions.

Adding to the discourse on China's economic outlook, Ray Dalio, the founder of Bridgewater Associates, highlighted the necessity for China to address its debt issues and consider easing monetary policy to avoid a potential "lost decade." Dalio's commentary, echoing President Xi's warnings of significant global changes, underlines the challenges China faces, including foreign investment concerns amid US-China tensions and the risk of conflict.

Foreign Exchange Markets

The Dollar Index, which reflects the value of the US dollar against a basket of major currencies, remained relatively unchanged over the week.

Commodities and Energy Markets

In the commodities sector, all major assets concluded the week positively.

Debt and Fixed Income Markets

Market Movements

According to CME data, the implied Fed Funds rate curve for the next eighteen months (for the period until September 2025) shifted upward by an average of 7 basis points, fully reversing the movement from last week.

The U.S. Treasury yield curve remained relatively stable, with 10-year bond yields decreasing by 2 basis points to 4.20%, and 30-year bond yields decreasing by 5 basis points to 4.34%.

Central Bank Insights

·????? In a recent policy meeting, the Bank of Japan (BOJ) decided to end its extensive easing program and implement the country's first interest rate increase since 2007, marking a cautious approach towards policy normalization. Board members emphasized the need for caution, highlighting that Japan's economy does not necessitate rapid policy rate hikes at this stage. The decision reflects a consensus among Governor Kazuo Ueda and fellow board members to proceed slowly with rate adjustments, which continues to exert pressure on the yen. This cautious stance is partly due to the yen's significant weakening, prompting government officials to issue warnings against speculative currency trading.

Board member Naoki Tamura, known for his hawkish views, expressed his intent to continue gradual interest rate hikes as part of the policy normalization process. Tamura emphasized the importance of transitioning from the extensive monetary easing measures cautiously, indicating that further rate adjustments remain a possibility despite the current accommodative financial conditions.

Prime Minister Fumio Kishida, meanwhile, advocated for the continuation of Japan's monetary easing measures, underscoring the government's focus on preventing a return to deflation. Kishida's remarks come amid concerns over the yen's depreciation, which has benefited exporters but increased the cost of living for consumers by raising the prices of imported goods like fuel and food.

·????? Bank of England (BOE) policymakers Catherine Mann and Jonathan Haskel have expressed caution regarding the market's expectations for interest rate cuts this year. Mann, who has been notably hawkish and voted for rate hikes since December 2021 until recently, shifted her stance last week by voting to keep rates steady at 5.25%. She cited a softening labor market and decreased consumer spending on discretionary services as reasons for this change. Despite this, Mann believes that the financial markets are too optimistic about the potential for rapid rate reductions, pricing in three quarter-point cuts starting in August. She emphasized that the UK is unlikely to initiate rate cuts before the US Federal Reserve due to stronger wage growth and more persistent services inflation in the UK.

Jonathan Haskel, another hawkish member of the Monetary Policy Committee (MPC), shared similar views in an interview with the Financial Times. He suggested that interest rate cuts should be "a long way off," advocating for a later and slower pace of monetary easing than currently anticipated by the markets. Like Mann, Haskel revised his vote based on improved inflation figures but remained cautious about cutting rates from the current 16-year high.

Both MPC members highlighted concerns over wage growth and services inflation, indicating these factors are likely to ease only slowly. Their stance contrasts with BOE Governor Andrew Bailey's more optimistic outlook, who mentioned that the UK is making progress in the fight against inflation and suggested that officials need not wait until inflation reaches the 2% target before considering rate cuts.

Mann's comments, in particular, highlighted the significance of market expectations and the impact of the market curve on economic outcomes, noting that mortgage rates and other market-driven rates more directly affect borrowers than the BOE's bank rate. Despite the caution expressed by Mann and Haskel, traders' bets on BOE rate cuts remained largely unchanged, with the first cut fully priced by August and a significant chance of a cut as early as June, in line with expected easing cycles by the European Central Bank and the Federal Reserve.

·????? European Central Bank (ECB) officials have indicated a cautious approach toward adjusting interest rates amidst varying economic signals across the eurozone. Chief Economist Philip Lane emphasized the return of wage growth to normal levels, considering several years of above-normal wage increases. He expressed confidence in inflation stabilizing around the 2% target in the coming years, hinting at a potential reversal of rate increases if this assessment holds.

Governing Council member Martins Kazaks suggested that inflation is under control and that June could be an appropriate time for the ECB to start reducing borrowing costs, aligning with market expectations. He emphasized a cautious, step-by-step approach to rate cuts, observing their impact on the economy.

Executive Board member Piero Cipollone argued for a swift reduction in interest rates despite significant wage increases, advocating for salary recovery to support Europe's fragile economic recovery. He stressed that if data confirms the projected scenario, the ECB should be prepared to dial back its restrictive monetary policy stance promptly.

Fabio Panetta, another Governing Council member, noted the rapid reduction in inflation and the approaching conditions for monetary loosening, attributing this to the ECB's restrictive policy and falling energy prices. Meanwhile, Francois Villeroy de Galhau argued against the economic risks of prolonged high interest rates, suggesting that rate cuts should begin in the spring, potentially as early as April or more likely in June, independent of the Federal Reserve's schedule.

A Reuters poll of economists predicts the ECB will start cutting rates in June, with the majority expecting the first reduction to occur then. While opinions diverge on the pace and extent of rate cuts, there is a consensus that easing will be data-dependent, with the ECB treading carefully to avoid rekindling inflation.

·????? Federal Reserve officials across the board are contemplating the timing and extent of interest rate cuts amidst mixed economic signals. Chicago Fed President Austan Goolsbee aligned with the median projection of three rate cuts this year, a view echoed by ten other officials during the Fed's March meeting. Goolsbee emphasized the necessity of a balanced approach due to the recent uptick in consumer prices, despite a period of rapid disinflation in the latter half of 2023.

Atlanta Fed President Raphael Bostic, advocating for a single rate cut, emphasized patience and data-dependence, particularly as long as the economy remains robust with strong GDP growth and employment. Bostic's stance reflects a careful approach to not hasten inflation reduction below the 2% target, suggesting the Fed could afford to wait and observe the economic trajectory.

Fed Governor Lisa Cook advocated for a cautious approach to rate cuts, aiming to ensure inflation sustainably returns to the 2% target while maintaining a strong labor market. Cook highlighted the uneven path of disinflation, suggesting that a deliberate approach to policy adjustments is necessary.

Christopher Waller, another Fed Governor, argued against rushing to lower rates, calling for more substantial inflation data over a couple of months. Waller's remarks reflect a readiness to delay or diminish the anticipated rate cuts in response to recent economic data showing a strong economy and hiring, coupled with disappointing inflation figures.

Fed Chair Jerome Powell reiterated the central bank's stance on not hurrying to cut interest rates. Powell highlighted the solid growth of the US economy and the robust labor market as factors that afford the Fed more confidence in inflation's downward trajectory before considering rate reductions. Powell, like his colleagues, seeks more data to ensure inflation is firmly on a path toward the 2% target, maintaining that the Fed's overall message has remained consistent.

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