Latest / Markets with Megan: A Quick Financial Markets Update / Did 3 Reports Just Change Fed Plans? | S3 E170 | 10-01-26

Transcript

Did 3 Reports Just Change Fed Plans? | S3 E170 | 10-01-26 · Markets with Megan: A Quick Financial Markets Update

• 0:00
  Megan Horneman: It's been a big week to see how the Fed is doing, meeting their dual mandate, which is price stability, but also that maximum employment.
• 0:08
  Megan Horneman: It's Thursday, October the 1st, and this is Markets with Megan.
• 0:11
  Megan Horneman: If you like this podcast, you can subscribe to it.
• 0:13
  Megan Horneman: Hit that alarm bell that you see, share it with your friends, family, colleagues, anybody who's interested in the economic data that we get on a daily basis and what it means for your investments.
• 0:23
  Megan Horneman: So let's dig into what we've seen this week.
• 0:25
  Megan Horneman: We got we've we started already with getting information around the labor market and we got the Fed's preferred inflation indicator.
• 0:32
  Megan Horneman: So when we look at the labor market, we got the Joltz job opening report for the month of August on Wednesday, and job openings actually fell to a five-month low.
• 0:42
  Megan Horneman: What we're seeing is this, you know, not really hiring, but not necessarily firing because we did see that layoffs fell to the lowest level since March of 2025.
• 0:52
  Megan Horneman: We're also seeing that people are holding on to their jobs.
• 0:54
  Megan Horneman: They're not voluntarily quitting like we saw in the aftermath of the pandemic.
• 0:59
  Megan Horneman: The quits rate was unchanged at 1.9%, and that's the lowest since 2020.
• 1:04
  Megan Horneman: Yesterday we got the PCE core, which came in on a year-over-year basis for the month of August, a little bit better than expected, but it was unchanged from the prior month, and it surely is still much higher than the Fed's target range.
• 1:18
  Megan Horneman: It's growing 3% on a year-over-year basis.
• 1:21
  Megan Horneman: But what's a little concerning and the Fed needs to pay attention to is that super core PCE, which is the services with excluding housing.
• 1:30
  Megan Horneman: And services is where we spend the majority of our money.
• 1:32
  Megan Horneman: So they want to get watch those price pressures, and that is rising 3.46% on a year-over-year basis.
• 1:39
  Megan Horneman: So again, not near the Fed's target and burdensome for households.
• 1:44
  Megan Horneman: Today we got the ISM manufacturing and report.
• 1:47
  Megan Horneman: And this is more of a gauge on the manufacturing sector, but we get a component of this report that's called the prices paid.
• 1:53
  Megan Horneman: And this is where we're seeing those inflation pressures and the price pressures from what's going on with the war with Iran.
• 2:00
  Megan Horneman: We saw that manufacturing remained in expansion territory, but it was slightly weaker than the month of August.
• 2:06
  Megan Horneman: And the prices paid component jumped to the highest since uh May of this year.
• 2:11
  Megan Horneman: So we unwound all that benefit from the pause in the war and possible talks between the U.S.
• 2:16
  Megan Horneman: and Iran.
• 2:17
  Megan Horneman: And we're right back up to manufacturers having to pay similar prices to they had to when the war broke out.
• 2:24
  Megan Horneman: These data points that we got today, and some also a little bit of dovish speak from the Federal Reserve officials, they didn't necessarily say that they want to cut interest rates, but some of them did insinuate that they could pause and just see how the data comes in before they make another action.
• 2:41
  Megan Horneman: And the the most likely action still is another rate hike.
• 2:44
  Megan Horneman: It's just, will it be in October or December?
• 2:47
  Megan Horneman: Right now, the probability of an October rate hike is 24%.
• 2:51
  Megan Horneman: It was about a 50-50 chance or earlier this week.
• 2:55
  Megan Horneman: And then the December probability is a 76%.
• 2:58
  Megan Horneman: Now these probabilities can change very quickly.
• 3:01
  Megan Horneman: And the biggest test is going to be tomorrow when we get the payroll report for the month of September.
• 3:06
  Megan Horneman: This is the month the monthly jobs report that moves markets significantly.
• 3:11
  Megan Horneman: And I think the markets are really trying to get an idea of what the Fed's going to do at their October meeting.
• 3:16
  Megan Horneman: Right now, the expectation is that the U.S.
• 3:18
  Megan Horneman: economy added 88,000 jobs and that the unemployment rate remained unchanged.
• 3:23
  Megan Horneman: So we'll be back tomorrow to give you our update and our analysis on that report.
• 3:28
  Megan Horneman: That's all we have today.
• 3:30
  Megan Horneman: If you want a history of our podcast, you go to marketswithmegan.fm.
• 3:33
  Megan Horneman: Thank you.