A triangle that illuminates the future
The latest data and FOMC speakers had interesting signals, while Biden Taking a step ahead on his infrastructure plans.
We have some traditional Hawkish and Dovish stances between FOMC members, however, they can change their ideas, depend on the market situation. The last example is Mrs. Loretta J. Mester, President, and CEO of the Federal Reserve Bank of Cleveland. After continuing hawkish stances from FED officials such as Bullard, Brainard, Williams, and Evans now she is also joining the Hawkish group. She believes that inflation can exceed 2% in the next year or two, however, the overall situation remains stable, and Fed can begin to reduce bond purchases amount from November, and rate hikes can start in 2022. At the same time, Mr. Patrick Timothy Harker, the President of the Federal Reserve Bank of Philadelphia stated that he hopes to complete the reduction of Bond purchases next summer, and FED can raise the rates at the end of 2022 or early 2023.
But the main issue is a dichotomy among members of the Federal Reserve. We had the ultra-dovish stance of Mr. Kashkari as well. Once again he emphasized that the Labor market still needs support and way far than the FED target and full recovery. About inflation, he believes that it will decrease with time passing, and it is just a matter of time. According to his words, FED has to start the rate rising no earlier than 2024.
About the labor market, one of the most important points that we need to pay attention to is the "resigning" numbers. According to the released numbers of the US Department of Labor in September, the JOLTS Job Openings in the United States in July hit a record high for the fifth consecutive month, reaching 10.9 million. The main problem is about the requested salary level and the changes made in specialties that employers need and employees asking, which leads to greater challenges in production efficiency and management costs. Now one of the main problems is that after reopenings that employers asking their employees to get back to their jobs, many of them are not ok with that and planning to change the job. Data shows that about 40% of employees in the United States are considering changing their careers before the beginning of 2022-this has brought a challenge for the labor market to return to normal levels.
And finally in the White House, after deadlocking in congress in voting for the infrastructure and expenditure bill, reports say that President Biden has once again compromised, proposing a compromise of $1.9 trillion to $2.3 trillion. And signed a provisional appropriation bill to prevent the government from falling into a shutdown. However, this bill does not include a suspension of the debt ceiling. If the White House and Congress can not reach an agreement before October 18, the United States can face debt default, and as the result, up to 6 million jobs can be destroyed, living expenses can increase, US Dollar will increase, investors will dump US Treasury bonds and so on.