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The bottom line from last week’s Federal Reserve (Fed) meeting and subsequent strong payroll number is that it seems premature to pause. The Fed delivered its fourth 75-basis-point hike, bringing the federal funds rate up to 4%, while nonfarm payrolls exceeded expectations and average hourly earnings accelerated from September.1 Treasury rates also moved higher over the course of the week as the curve flattened. 2
The week ahead will have a couple more meaningful economic releases, with the Consumer Price Index on Thursday and the University of Michigan Consumer Sentiment Index on Friday. 3 The market continues to look for signs of peak inflation and slowing growth, which would help feed the narrative of a Fed pivot by the spring and a soft landing in 2023.
Sources:
1Source: Fox Business- Fed Hikes Interest Rates by 75 Basis Points for Fourth Straight Meeting; 11/2/22
2Source: CNBC- Bond Market; as of 11/7/22
3Source: MarketWatch- U.S. Economic Calendar; as of 11/7/22
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