MNI US Macro Weekly: Waller & Payrolls Conspire Against Pause

Executive Summary

• The November payrolls report didn’t have enough signs of strength to warrant a pause from the Fed later this month and accordingly Fed Funds futures have shifted to pricing 22bp of cuts vs 18bp prior.
• It built on a softer than expected ISM services report on Wednesday even if it was from a strong base.
• Fed Governor Waller on Monday gave about as explicit an indication as we've received that the base case for the FOMC is to cut again.
• CPI will have to be extremely strong on Wednesday to see a pause back on the table along with a blackout period steer. Consensus eyes core CPI at a solid 0.3% M/M in Nov after 0.28% in Oct and 0.31% in Sept.
• Combined with the unemployment rate increasing in November but still on track for a sizeable undershoot of median FOMC forecasts, and only just meeting the Q4 forecast of the most hawkish FOMC members, and there has been calls by some for a gradual approach to cuts beyond.  

PLEASE FIND THE FULL REPORT HERE: US week in macro_241206.pdf