John Silvia
John Silvia
bond continue discount fed gains growth higher inflation interest modest raises rates remain rise short traders trend
Inflation gains remain modest but they are gains. This suggests that interest rates will continue to rise as the Fed raises rates at the short end and bond traders discount trend growth and higher inflation at the long end.
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The Fed is going to look at this number and go full-steam ahead with 25-basis-point increases at its next two meetings to keep inflation in check, ... This is a pretty good payroll number for September. The market dodged a bullet with this report.
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You can no longer make the argument that there is a lot of excess capacity out there. The bias on inflation is a little bit to the upside and the Fed has to be careful about that.
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Labor costs were one of the key inflation concerns cited by Chairman (Alan) Greenspan in his latest testimony, ... Our outlook reinforces his concern.
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He'll keep up the Greenspan theme that the Fed's no. 1 goal is to keep inflation under control.
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Growth looks solid. The problem is prices paid were up again, suggesting inflation pressures remain a concern.
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What you're seeing is that inflation is rising, ... It's still at a low level, but you know what the trend is. The question to ask is, How much is too much? At what point does the Fed say it's risen enough that we don't want it to go any higher? That's the difficult question to answer.
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Increased domestic demand is now being satisfied by supply from abroad. Fewer domestic jobs have been created than the average historical experience and predicted by the models used by policy makers.
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Once that confidence is lost, foreign capital stops flowing here. We'll have much higher interest rates and a negative impact on the economy.
line sales
On balance, I think it's the latter. In most businesses, inventories are in line with sales expectations.
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I've heard a lot of discussion the number could come out stronger. We have different models, and a couple of them have estimates where the number is higher.
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Taken together, all this employment data provides the Federal Reserve with a measure of confidence to allow an increase in the funds rate,
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Summer months can be particularly hazardous for forecasters, ... The timing of the end of the school year, seasonal hiring patterns and even weather can distort the monthly figure.
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The language will clearly be different. He'll give you a direct answer.