00:00I think that inflation data yesterday answered a few questions over the balance between growth and inflation, right, which is, of course, the perennial problem that the Fed is trying to solve.
00:11And so, yeah, yesterday's data really showed that there are some parts of the inflation picture that can be explained away by seasonal factors or perhaps not something to be worried about.
00:23And, you know, especially given the combination of that and the softer picture for the labor market in the U.S., I think the balance really tips toward rate cuts, which, as you can see from the price action overnight, markets are really happy about.
00:39Yeah, I mean, thinking about what could go wrong between now and September, though, I mean, we do have another jobs report to get before then as well.
00:46Where are the potential, I suppose, disruptors to that current narrative?
00:50Yeah, I mean, I think what we might see as a potential disruptor, Stephen, is any change in that labor market data, right?
00:58I think part of the uncertainty over that is the big revisions that we've seen over the last couple of releases.
01:06And so there's a question over whether, you know, the next data point, is that something that traders can rely on as an indicator of the overall path of the U.S. labor market?
01:18Or is that going to be subject to change?
01:20And so it's just a question of, you know, how clear of a picture can the data really give us in terms of the overall state of the labor market?
01:30And if there are any surprises, for instance, revisions to the next set of data that could change the current trajectory, it would be something for traders to keep an eye on.
01:41We're going to be speaking to Scott Besson, the team stateside, in the next few hours later today.
01:45We'll be broadcasting that, of course, the Treasury Secretary of the U.S.
01:48And he has been pushing, or at least trying to open the door, to a jumbo cut from the Fed, 50 basis points.
01:55How are the markets reacting to this?
01:56How should traders and investors be thinking about the Treasury Secretary pushing for a jumbo cut?
02:01Well, you know, Tom, in less unorthodox times, a 50 basis point rate cut, especially from the Federal Reserve, would be considered alarming.
02:11And, you know, that would be something in the past that would cause investors to think, well, hang on, is there something in the data that we're not necessarily seeing that the Federal Reserve is particularly worried about?
02:22But, you know, we're not necessarily in orthodox times at the moment.
02:26And so, you know, you do have this administration that is increasingly pressing the Federal Reserve to cut rates more.
02:32And there is a mix of data, at least on the inflation side, as well as on the labor market side, that is opening the path to such a move.
02:41I think that's not something that markets are necessarily pricing in at the moment.
02:46They are still looking for a more measured 25 basis point rate cut.
02:49But if we do see that, that's something that could potentially create, at least in the short term, a large amount of volatility, just given that it is not within the base case of market expectations at the moment.
03:00Another question, though, over the data that we've been mulling over, these comments from E.J. Antony, the man nominated to take over the Bureau of Labor Statistics.
03:08The jobs report should perhaps go to a quarterly report rather than monthly while they sort out issues with the data.
03:15I mean, how would a move like that go down with markets?
03:18Well, Stephen, you know, markets love certainty, right?
03:20And the more data that they can pin that certainty on, the more, I guess, relaxed they are about things.
03:27And so the fact that this suggestion has come up, it's probably not going to go down well initially with investors because they do like the frequency of that data.
03:37I mean, in New York, there are watch parties sometimes that happen when there are labor markets and figures that are coming out that are quite important.
03:45And so, yeah, I think at first blush, that's probably not going to go down well with markets.
03:49But it just depends on, you know, whether this even comes to fruition and how they're going to carry it out.
03:55What does a jobs report watch party look like?
03:57It's a lot of it's a lot of alcohol involved.
04:00Oh, it is.
04:00Yeah, it is like it like you'd expect an Oscars watch party.
04:03Exactly. Yes.
04:04But for Wall Street.
04:05Yeah. And very early in the morning.
04:07So that could be, you know, that's interesting.
04:09Clearly, Christina Kino has been an attendee.
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