Latest / Markets with Megan: A Quick Financial Markets Update / Inflation Won’t Quit. Will the Fed Blink First?? | S2 E089 | 10-17-25

Transcript

Inflation Won’t Quit. Will the Fed Blink First?? | S2 E089 | 10-17-25 · Markets with Megan: A Quick Financial Markets Update

• 0:00
  SPEAKER_00: We're going on 16 days here with this government shutdown.
• 0:03
  SPEAKER_00: It's Friday, October the 17th, and this is Markets with Megan.
• 0:07
  SPEAKER_00: If you like this podcast, please subscribe, hit that alarm bell, and always you can share this with friends, family, or colleagues.
• 0:14
  SPEAKER_00: But we're here to break down what's going on with the economy and what it means for markets.
• 0:18
  SPEAKER_00: Unfortunately, with the government shutdown, we don't get those regular economic reports, but there are private sector reports and Federal Reserve reports that we're still seeing.
• 0:28
  SPEAKER_00: We wanted to summarize today really what we've gotten from some of these private reports and the Federal Reserve reports, specifically around manufacturing and services.
• 0:39
  SPEAKER_00: Why is this important?
• 0:40
  SPEAKER_00: Because services particularly makes up the majority of where we spend our money.
• 0:45
  SPEAKER_00: And the overriding theme that we've seen in these reports is that inflation is still a problem, and the Fed cannot ignore this, and the employment market is weakening.
• 0:56
  SPEAKER_00: They are walking a fine line here because what do you do, save the labor market, or do you try and fight inflation?
• 1:03
  SPEAKER_00: We think that they have the ability to kind of tow the line between both, but the comments we've been getting is that they're much more worried about the employment market and they're likely to cut interest rates at their next meeting, which is October 29th.
• 1:16
  SPEAKER_00: There's two more meetings this year, the 29th of this month, and then December 10th.
• 1:21
  SPEAKER_00: The futures market is expecting them to cut rates at both meetings.
• 1:25
  SPEAKER_00: But this is why we're concerned about that inflation picture.
• 1:28
  SPEAKER_00: Let's look at the ISM services report.
• 1:31
  SPEAKER_00: The prices paid component, 69.4.
• 1:35
  SPEAKER_00: That jumped up again.
• 1:36
  SPEAKER_00: Typically, when you see that indicator running above 60, you do tend to see inflation close to 3%.
• 1:43
  SPEAKER_00: And that's well above the Fed's target.
• 1:46
  SPEAKER_00: ISM manufacturing, that price is paid.
• 1:49
  SPEAKER_00: It has moderated a bit from August, but in the September reading, it is 61.9%.
• 1:56
  SPEAKER_00: When you see that running above 60, you tend to see inflation above 4%.
• 2:02
  SPEAKER_00: So nowhere near again towards the Fed's target.
• 2:05
  SPEAKER_00: Let's look at some of the regional Fed reports we got this week.
• 2:09
  SPEAKER_00: Um, if you look at the New York Fed Empire Manufacturing Index, that prices paid component uh moved higher as well.
• 2:17
  SPEAKER_00: The employment side of it got a little bit better, but not great.
• 2:21
  SPEAKER_00: Still worth concern for the Fed.
• 2:23
  SPEAKER_00: And then when you look at the Philly Fed report, again, prices paid higher than it was last month, the number of employees weakening as well.
• 2:32
  SPEAKER_00: We are more concerned at this point on inflation, and we're concerned on what the rhetoric the Fed delivers can do to inflation, because inflation is a vicious circle.
• 2:42
  SPEAKER_00: If you as a consumer think that prices are going to be higher in a month or two or three, then you're gonna buy now instead of wait.
• 2:50
  SPEAKER_00: And what that can do is just uh inadvertently raise prices, and that becomes a vicious circle the Fed can't get out of.
• 2:58
  SPEAKER_00: So we are concerned about inflation.
• 3:00
  SPEAKER_00: We don't think that's gonna change the Fed's actions at their meetings, but we surely hope it does change their tone for what we can expect in 2026.
• 3:09
  SPEAKER_00: That's all we have today.
• 3:11
  SPEAKER_00: If you want a history of our podcast, you can go to marketswithmegan.fm.
• 3:14
  SPEAKER_00: Thank you.