Tight US Labour Market Raises the Ante on the Fed to Be More Aggressive
​The faster-than-expected decline in the unemployment rate raises the ante on the Federal Open Market Committee (FOMC) to become more aggressive in tightening monetary policy, particularly in the absence of any offsetting economic forces. The tightening in labour market conditions has been partly driven by supply-side forces, notably people leaving the workforce, that were absent during the prior occasions when the civilian unemployment rate previously reached 4.4% in 1999 and 2007. Although wage inflation is rising, it is still historically benign for the current level of headline labour market tautness. Inflation remains stubbornly below the FOMC’s 2% long-term target, and this could have potential ramifications for future monetary policy conduct. Recent political setbacks for the Trump Administration have burst some of the euphoria about the reflation trade and unsettled financial markets.
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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