New Highs for Stocks, Uncertainty at the Fed (E232)

DoubleLine Portfolio Manager Eric Dhall and Fixed Income Allocation Strategist Ryan Kimmel dissect the Sept. 15-19 week, with stocks (0:22) rallying to new highs on tech, comm services and consumer discretionary; yield-curve steepening (2:15); and commodities weakening amid strength in precious metals (3:40). The week’s macro news (7:04) was dominated by the Federal Open Market Committee’s quarter-point fed funds rate cut and comments by Federal Reserve Chairman Jerome Powell Sept. 17 indicating a preoccupation with risks to the labor market, albeit in a context of ongoing concern about the future path of inflation. While forecasts in some corners called for as many as three FOMC member dissents, only newly appointed Governor Stephen Miran, who has called for three 0.5% federal funds rate cuts over the last three FOMC meetings of 2025, voted in disagreement with Wednesday’s quarter-point cut. However, Eric and Ryan take note of the extraordinary dispersion among FOMC members over the future course of monetary policy. Looking ahead to the week of Sept. 22-26 (21:43), Eric and Ryan will be particularly focused on the Fed’s preferred gauge of inflation, the Personal Consumption Expenditures (PCE) Price Index for August. Based on CPI, PPI and import and export prices, economists’ consensus forecasts a relatively benign month-over-month increase of 20 basis points (0.20%), which would leave the year-over-year Core PCE increase unchanged at 2.9%.