Baseline Fed Policy Outlook Intact As Leadership Choices Narrow
The hurricane-impacted September Employment Situation report will not affect Fed policy conduct, because the household survey depicted further labour market tightening.
Somewhat perversely, other late-Q3 US economic data appears to have strengthened as testified by the strong readings for Institute of Supply Management surveys and auto & light truck sales, thereby further vindicating the Fed’s baseline policy outlook.
Continued strength in US manufacturing could hinge critically on the magnitude of prospective dollar appreciation under a regime of easier fiscal policy being offset by a tighter stance from the Fed.
The number of potential candidates to replace Fed Chair Yellen has reportedly been reduced to two from six, but there is allegedly disagreement between President Trump and Treasury Secretary Mnuchin about the most suitable candidate.
Recently announced proposals by the US Treasury to deregulate capital markets could complicate the Fed’s ability to reduce excessive risk-taking by financial institutions that could ultimately be detrimental to the real economy.
International capital market oversight could be made more difficult by the US aggressively pursuing its own interests in the negotiation of new cross-border regulations.
DeSaque Macro Research Limited was formed by Said DeSaque in April 2012 with the intention of delivering independent global macro investment insights and new thematic long-term ideas to investors, along with an agnostic opinion of the markets.
Said DeSaque has over 29 years of experience working as a professional economist in financial services, primarily based in London. His working role has involved extensive travel around the world, bringing him into contact with investors of different cultural backgrounds and investment requirements. Prior to establishing DeSaque Macro Research, Said held positions as Senior Economist and Investment Strategist at US banks Robert W Baird and William Blair. He began his career as a graduate at PaineWebber in 1986, where he became Head of the London Economics Department in 1996. This role allowed him to engage with senior investment professionals, alongside regulators and provided a unique perspective of market intelligence at work.
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