Goldilocks Data Keeps Fed on Hold

[Andrew Postell]

This morning’s economic data painted a picture of steady but unspectacular growth paired with ongoing disinflation, reinforcing the market’s current wait‑and‑see posture. GDP came in broadly in line with expectations, underscoring that the economy continues to expand, though at a more moderate pace. Meanwhile, inflation readings were constructive: headline PCE and Core PCE both continued to cool, signaling further progress toward the Fed’s inflation objective. Personal Spending remained resilient but showed signs of normalization, suggesting demand is holding up without re‑accelerating price pressures.

Markets generally took the data in stride. Treasury yields drifted modestly lower in the immediate aftermath, with the 10‑year hovering around the mid‑4.20s, as investors interpreted the release as neither hot enough to warrant tightening fears nor weak enough to price aggressive easing. Risk sentiment remained cautious, and rate volatility stayed contained, reinforcing the sense that markets are trading momentum and credibility rather than reacting to any single data point — a dynamic echoed across global bond markets in recent sessions. MBS are mostly unchanged on the day.

From a policy perspective, today’s data does little to alter the Fed’s near‑term trajectory. Inflation is moving in the right direction, but growth and consumption remain firm enough to justify patience. For now, policymakers are likely to maintain a restrictive stance while waiting for cumulative evidence that inflation is durably anchored. As a result, the market focus shifts quickly forward: subsequent data and financial‑condition feedback will determine whether the Fed can begin easing later this year — or whether “higher for longer” remains the default baseline.

Honestly, this announcement by Taco Bell is probably more exciting….

https://www.allrecipes.com/taco-bell-crispy-chicken-nuggets-return-january-2025-11889713

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