NY Fed Data: Inflation Expectations Rise, Job Loss Concerns Grow, Rate Cut Speculation

New York Fed Inflation Expectations

• 📈 Inflation expectations at the one-year and five-year horizons from the New York Fed have risen.
• 💡 The one-year inflation expectation is up a tick to 3.1%, remaining in an elevated range.
• 🎯 The five-year inflation expectation increased by three ticks to 2.9%, a key concern for the Fed.
• 📉 Conversely, expectations for gas prices, medical care, college, and rent all declined.

Labor Market Confidence

• ⚠️ Unemployment expectations dropped significantly by 2.3 percentage points, reaching the lowest reading since January 2025.
• 🧩 Paradoxically, concern about job loss grew, and confidence in finding a new job decreased.

Federal Reserve Monetary Policy

• 📊 The market has almost fully priced in a rate cut for September, with October also largely priced in.
• 🔑 December remains a swing factor, with a 51% probability for a rate cut.
• 🗣️ Discussion highlights Christopher Waller as a potential front-runner for Fed chair, noted for his convincing arguments for a rate cut.
• 🧠 Waller is recognized for his flexibility, ability to dissent from the chair, and articulate monetary policy arguments cogently.