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Very interesting…
(Bloomberg) -- The Federal Reserve’s quantitative-tightening program risks being propelled toward an early end as US politicians bicker in Washington over raising the national debt limit, according to some economists and bond-market participants.

By shrinking its bond portfolio by up to $95 billion a month, the central bank is draining liquidity from the US financial system — complementing its interest-rate hikes in the battle to control inflation. An early end to QT could therefore provide the US economy with some relief.
A fed pivot would be bullish.
 
90scane said:

United States Core Inflation Rate

Core consumer prices in the United States increased 2.60 percent in December of 2025 over the same month in the previous year. This page provides - United States Core Inflation Rate - actual values, historical data, forecast, chart, statistics, economic calendar and news.
tradingeconomics.com tradingeconomics.com

Core Was never at 9%. Core is what Powell uses to determine his rate hikes. He wants core at 2% and it is at 5.7%. Thus, we aren’t seeing a big drop off in core.
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SpikeUM said:
So as the resident grinch in this thread, I find the 10 year at 2.75% really concerning, considering we have 8%+ inflation and a Fed simultaneously tightening and starting QT. The bond market, which is considered the smartest market, is forecasting a recession. Coupled with high inflation, if that continues, and you have stagflation.
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OK, well I believe in this thread people were complaining about inflation being over 8% last summer.

In any case, we should be more specific what numbers we are referring to.
 
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So it’s safe to say Google is going to drop…..
mountains dropping GIF by South Park
 
TheEye said:
Too soon to say. Gas has spiked in times of low inflation. It’s also spiked before a recession.
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Btw I’m in the camp that the fed could and probably should relax right now. I think we needed a clean sweep of soft data to get them to risk it though.

A high January inflation report means more hikes. I don’t care about inflation for its own sake, just its affect on the market
 
[]_[] swag said:
Btw I’m in the camp that the fed could and probably should relax right now. I think we needed a clean sweep of soft data to get them to risk it though.

A high January inflation report means more hikes. I don’t care about inflation for its own sake, just its affect on the market
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If you ignore it, we run the risk of spiraling. Higher costs, higher income, higher income leads to higher costs…
 
[]_[] swag said:
Btw I’m in the camp that the fed could and probably should relax right now. I think we needed a clean sweep of soft data to get them to risk it though.

A high January inflation report means more hikes. I don’t care about inflation for its own sake, just its affect on the market
Click to expand...
Aggressive to me would be another 0.5 rate hike in Feb. 0.25 is most likely and if there's abysmal news about the economy, the Fed does nothing for a while.

I think the fact the stock market was at all time highs a year ago and home prices were in the midst of bidding wars then too, we see prices plateauing. Oil was nearly $90 per barrel 1 year ago.
 
TheEye said:
Aggressive to me would be another 0.5 rate hike in Feb. 0.25 is most likely and if there's abysmal news about the economy, the Fed does nothing for a while.

I think the fact the stock market was at all time highs a year ago and home prices were in the midst of bidding wars then too, we see prices plateauing. Oil was nearly $90 per barrel 1 year ago.
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The FED wants CORE CPI at 2%. It is at 5.5 and started 2022 around 6%. I suspect they will keep pushing higher but it could be at a much slower rate to see if the year-over-year impact of rate hikes helps come March. If we should be watching CORE, seeing 30 yr rates at 6.25% with a 28% jump in demand isn't a good sign for cooling since housing is a major factor in CORE. Energy isn't included in CORE. CORE has averaged 3.6% since 1957 so I'm not sure why the FED wants 2%.
 
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90scane said:
The FED wants CORE CPI at 2%. It is at 5.5 and started 2022 around 6%. I suspect they will keep pushing higher but it could be at a much slower rate to see if the year-over-year impact of rate hikes helps come March. If we should be watching CORE, seeing 30 yr rates at 6.25% with a 28% jump in demand isn't a good sign for cooling since housing is a major factor in CORE. Energy isn't included in CORE. CORE has averaged 3.6% since 1957 so I'm not sure why the FED wants 2%.
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6.25% was brought on from 7% due to a drop in demand. I would not expect rates under 7% for very long. I would not be suprised to see 8% rates for mortgages some time this year.
 
TheEye said:
6.25% was brought on from 7% due to a drop in demand. I would not expect rates under 7% for very long. I would not be suprised to see 8% rates for mortgages some time this year.
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6.25% was brought on more so by the drop in the bond market than bank spread (lack of supply leading banks to reduce the spread/profits thus increasing their risks).

30-Year Fixed Rate Mortgage Average in the United States | FRED | St. Louis Fed

Graph and download economic data for 30-Year Fixed Rate Mortgage Average in the United States from 1953-04-01 to 2026-01-15 about 30-year, mortgage, fixed, interest rate, interest, rate, USA, 10-year, maturity, Treasury, bills, 3-month, 2-year, yield curve, and spread.
fred.stlouisfed.org
 
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TheEye said:
Aggressive to me would be another 0.5 rate hike in Feb. 0.25 is most likely and if there's abysmal news about the economy, the Fed does nothing for a while.

I think the fact the stock market was at all time highs a year ago and home prices were in the midst of bidding wars then too, we see prices plateauing. Oil was nearly $90 per barrel 1 year ago.
Click to expand...
The feb rate hike will occur on Feb 1. Not enough time for abysmal news on the economy. After the higher Jan inflation reports that will come in February, the Fed will not pause and will continue on to 5% in March like they have been indicating the whole time.
 
Politico
The war on inflation may be far from over, but the economy has reached a key, little-noticed milestone: Workers' wage gains are finally outpacing the rise in consumer prices.

Americans' average income has beaten inflation for the past six months, driven by the plummeting cost of gas, along with drops in furniture, cars and other goods. If the trend continues, it could be a boost for President Joe Biden as he gears up for a tough reelection campaign, undercutting one of the main Republican arguments against his handling of the economy.
Just another reason why the Fed could pause…imo
 
[]_[] swag said:
The feb rate hike will occur on Feb 1. Not enough time for abysmal news on the economy. After the higher Jan inflation reports that will come in February, the Fed will not pause and will continue on to 5% in March like they have been indicating the whole time.
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If you read my post, you will notice I said 0.25 is most likely.
 
mr.h said:
Politico
The war on inflation may be far from over, but the economy has reached a key, little-noticed milestone: Workers' wage gains are finally outpacing the rise in consumer prices.

Americans' average income has beaten inflation for the past six months, driven by the plummeting cost of gas, along with drops in furniture, cars and other goods. If the trend continues, it could be a boost for President Joe Biden as he gears up for a tough reelection campaign, undercutting one of the main Republican arguments against his handling of the economy.
Just another reason why the Fed could pause…imo
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Having higher wages means more consumer spending which could lead to higher inflation. We need advancements in technology: AI, nuclear, EV, 3d printed buildings... We need more workers or a massive AI win on robots that can replace workers. We need the government to stop wasting funds.

Sure the short term could be the FED pausing but we still have some major headwinds that won't be solved at all by a FED pause. If anything, a pause could lead to a bigger wave of inflation and a much bigger FED Funds rate. Thus, I'd rather we suffer in the near term to make sure we aren't suffering for a much longer timeframe.
 
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90scane said:
Having higher wages means more consumer spending which could lead to higher inflation. We need advancements in technology: AI, nuclear, EV, 3d printed buildings... We need more workers or a massive AI win on robots that can replace workers. We need the government to stop wasting funds.

Sure the short term could be the FED pausing but we still have some major headwinds that won't be solved at all by a FED pause. If anything, a pause could lead to a bigger wave of inflation and a much bigger FED Funds rate. Thus, I'd rather we suffer in the near term to make sure we aren't suffering for a much longer timeframe.
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Keep in mind, China had halted a lot of production for years and our cheap goods were put on pause. They are reopening and hoping to capitalize by selling at a lower price point.
Everything else you say is totally valid and tech advancements will ease higher costs.
 
Big numbers coming…GDP, durable goods, jobless claims and personal consumption.
 
TimeEventImpactActualDevConsensusPrevious
THURSDAY, JANUARY 26
13:30USDChicago Fed National Activity Index (Dec)-0.51---0.05
13:30USDContinuing Jobless Claims(Jan 13) TRADE NOW1.675M0.641.659M1.655M
13:30USDCore Personal Consumption Expenditures (QoQ)(Q4) PREL TRADE NOW3.9% -12.785.3%4.7%
13:30USDDurable Goods Orders(Dec) TRADE NOW5.6% 4.302.5%-1.7%
13:30USDDurable Goods Orders ex Defense(Dec) TRADE NOW6.3% 4.08-0.1%-2.7%
13:30USDDurable Goods Orders ex Transportation(Dec) TRADE NOW-0.1% -0.250%0.1%
13:30USDGoods Trade Balance(Dec) PREL $-90.3B--$-84.1B
13:30USDGross Domestic Product Annualized(Q4) PREL TRADE NOW2.9% 2.742.6%3.2%
13:30USDGross Domestic Product Price Index(Q4) PREL TRADE NOW3.5% 0.353.3%4.4%
13:30USDInitial Jobless Claims(Jan 20) TRADE NOW186K-2.78205K192K
13:30USDInitial Jobless Claims 4-week average(Jan 20)197.5K--206.75K
13:30USDNondefense Capital Goods Orders ex Aircraft(Dec)-0.2% 0-0.2%0.1%

durable goods up..jobless claims almost even, GDP down but still strong, we are still spending, but at a slower rate. Personal consumption was down.
again the numbers from December are backwards looking. Good is bad and bad is good?????
 
A lot of consumer spending is related to discounts because of high inventory.
January is/was a great month for stocks.
I apologize for the optimism..
 
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