Latest / Markets with Megan: A Quick Financial Markets Update / Is the Labor Market Finally Cracking? | S2 E068 | 08-20-25

Transcript

Is the Labor Market Finally Cracking? | S2 E068 | 08-20-25 · Markets with Megan: A Quick Financial Markets Update

• 0:00
  Megan Horneman: We got a deeper insight into what the Fed was discussing at their July FOMC meeting.
• 0:05
  Megan Horneman: It is Wednesday, august the 20th, and this is Markets with Megan.
• 0:08
  Megan Horneman: If you like this podcast, please subscribe.
• 0:11
  Megan Horneman: Hit that alarm bell also share with friends, family or colleagues.
• 0:14
  Megan Horneman: But we wanted to come to you today to give a little bit more insight into the minutes that we received from the end of July Federal Reserve meeting.
• 0:24
  Megan Horneman: And typically the Fed comes out with a statement and a press conference immediately following their meeting, but it takes several weeks before we get the full transcript and this sometimes is a market mover.
• 0:36
  Megan Horneman: Sometimes it's not.
• 0:37
  Megan Horneman: What we do is we look within those details, especially when we have Federal Reserve officials that dissented or disagreed with the decision that came out of the committee.
• 0:48
  Megan Horneman: And remember, at that meeting we had two committee members that dissented on keeping interest rates unchanged.
• 0:54
  Megan Horneman: They wanted to cut interest rates.
• 0:57
  Megan Horneman: So we wanted to see what did all the other members say, what was important to them.
• 1:02
  Megan Horneman: And when you look through these minutes, what it's telling us is that this Fed is not as dovish as the market wants it to be.
• 1:09
  Megan Horneman: And I say want it to be because this market has been rising here, hitting fresh record highs since that meeting, with the anticipation that the Fed's definitely going to cut interest rates in September.
• 1:21
  Megan Horneman: Well, in this business, nothing is definitive and what we saw is those committee members that didn't dissent are very concerned about inflation.
• 1:30
  Megan Horneman: Let's just talk a little bit about.
• 1:32
  Megan Horneman: A majority of the participants in this comment said a majority of the participants judge the upside risk to inflation as the greater of the two risks being between the labor market and inflation.
• 1:45
  Megan Horneman: Many members discuss the fact that they don't know what the tariff implications will be and they're a little bit more concerned about inflation than all these headlines are telling us.
• 1:55
  Megan Horneman: So what does this mean?
• 1:57
  Megan Horneman: First of all, the September meeting is still several weeks away and we will get plenty more from an inflation standpoint.
• 2:04
  Megan Horneman: We'll also get another labor market report.
• 2:07
  Megan Horneman: These two things will be very important to decide if the Fed does cut interest rates in December or if they push it off to another month or two.
• 2:15
  Megan Horneman: We're still on the fence.
• 2:16
  Megan Horneman: I know the market's priced it in.
• 2:18
  Megan Horneman: It's about an 80 to 90 percent chance they will cut interest rates in September.
• 2:22
  Megan Horneman: But the Fed is walking that very fine line.
• 2:26
  Megan Horneman: We won't see tariff impacts until towards the end of this year, specifically the ones that went into effect August 1st.
• 2:34
  Megan Horneman: It takes time for that and last time I checked.
• 2:37
  Megan Horneman: The inflation data that we've received since this meeting have been good.
• 2:41
  Megan Horneman: Some of it's a little bit better than expectations.
• 2:45
  Megan Horneman: But looking on a year-over-year basis, we still have core inflation at the consumer level rising 3.1%.
• 2:52
  Megan Horneman: That's well above the Fed's target and it's up from about 2.8%, which we saw that recent low here earlier this year.
• 3:00
  Megan Horneman: So, inflation, we're not out of the woods.
• 3:02
  Megan Horneman: Don't get too excited about the fact that the Fed can come in and save the day come September.
• 3:07
  Megan Horneman: This is all we have today.
• 3:09
  Megan Horneman: If you want a history of our podcast, you can go to marketsofmeganfm.
• 3:12
  Megan Horneman: Thank you.