Economy

Standard DigitalWeekend Print + Standard Digitalwasnow $85 per monthBilled Quarterly at $199. Complete digital access plus the FT newspaper delivered Monday-Saturday.What’s included Global news & analysisExpert opinionFT App on Android & iOSFT Edit appFirstFT: the day’s biggest stories20+ curated newslettersFollow topics & set alerts with myFTFT Videos & Podcasts20 monthly gift articles to shareLex: FT’s flagship investment column15+ Premium newsletters by leading expertsFT Digital Edition: our digitised print editionWeekday Print EditionFT WeekendFT Digital EditionGlobal news & analysisExpert opinionSpecial featuresExclusive FT analysisFT Digital EditionGlobal news & analysisExpert opinionSpecial featuresExclusive FT analysisGlobal news & analysisExpert opinionFT App on Android & iOSFT Edit appFirstFT: the day’s biggest stories20+ curated newslettersFollow topics & set alerts with myFTFT Videos & Podcasts10 monthly gift articles to shareGlobal news & analysisExpert opinionFT App on Android & iOSFT Edit appFirstFT: the day’s biggest stories20+ curated newslettersFollow topics & set alerts with myFTFT Videos & Podcasts20 monthly gift articles to shareLex: FT’s flagship investment column15+ Premium newsletters by leading expertsFT Digital Edition: our digitised print editionEverything in PrintWeekday Print EditionFT WeekendFT Digital EditionGlobal news & analysisExpert opinionSpecial featuresExclusive FT analysisPlusEverything in Premium DigitalEverything in Standard DigitalGlobal news & analysisExpert opinionSpecial featuresFirstFT newsletterVideos & PodcastsFT App on Android & iOSFT Edit app10 gift articles per monthExclusive FT analysisPremium newslettersFT Digital Edition10 additional gift articles per monthMake and share highlightsFT WorkspaceMarkets data widgetSubscription ManagerWorkflow integrationsOccasional readers go freeVolume discountFT Weekend Print deliveryPlusEverything in Standard DigitalFT Weekend Print deliveryPlusEverything in Premium Digital More

When asked about whether a weakening labor market and manufacturing sector might prompt action from the Fed, Goolsbee avoided committing to a specific course but mentioned it doesn’t make sense to maintain a “restrictive” policy stance if the economy is softening.”The Fed’s job is very straightforward, maximize employment, stabilize prices, and maintain financial stability. That’s what we’re going to do,” he said during an interview on CNBC’s “Squawk Box” program.”We’re forward-looking about it. So if the conditions collectively start coming in like that on the through line, there’s deterioration on any of those parts, we’re going to fix it.”The interview took place amid significant market turmoil. Dow Jones Industrial Average futures dropped nearly 1,300 points, or about 3%, as Treasury yields fell sharply. The S&P 500 Futures dropped 3.7%, while Nasdaq 100 Futures lost 5.1%. The sell-off continued a downward trend that started on Thursday, following the Fed’s decision not to lower interest rates, sparking concerns that policymakers might be falling behind as inflation declines and the economy weakens.Concerns escalated on Friday when the Labor Department reported that nonfarm payrolls grew by just 114,000, and the unemployment rate rose to 4.3%, triggering the Sahm Rule, which signals a potential recession.However, Goolsbee does not believe a recession is imminent.”Jobs numbers come in weaker than expected, but not looking yet like recession,” he said. “I do think you want to be forward-looking of where the economy is headed for making the decisions.”Goolsbee acknowledged that current Fed policy is restrictive, a stance suitable only if the economy appears to be overheating. The central bank has kept its benchmark rate between 5.25% and 5.5% since July 2023, the highest in about 23 years.”Should we reduce restrictiveness? I’m not going to bind our hands of what should happen going forward, because we’re still going to get more information. But if we are not overheating, we should not be tightening or restrictive in real terms,” he said.Policymakers have focused on the “real” Fed funds rate, which is the Fed’s benchmark rate minus the inflation rate. As inflation falls, the real rate rises unless the Fed cuts rates. The real rate is currently around 2.73%, while Fed officials believe the long-term real rate should be closer to 0.5%.Markets are now expecting aggressive easing by the Fed, starting with a 0.5 percentage point rate cut in September, which is fully priced in according to 30-day fed funds futures contracts. Traders expect the central bank to reduce the funds rate by 1.25-1.5 percentage points by the end of the year, according to the CME Group’s FedWatch Tool. More

LONDON (Reuters) – Japan-focused hedge funds face the steepest daily performance losses on Goldman Sachs’ records, the bank said in a note on Monday, following a global stock rout sparked by a soft U.S. jobs report and last week’s Bank of Japan rate hike.Monday’s 12% slide in Japanese stocks led to “large performance” draw-downs for stock pickers trading on the fundamental values of company equities, said Goldman. As of the Asia close, Japan-focused hedge fund managers were down 7.6% from the last three trading sessions. Monday’s loss of 3.7% was the largest single daily performance decline in Goldman’s records. These past three trading sessions erased the entire yearly gains for these hedge funds taking their performances tracked by the bank to flat, Goldman said.Stock markets tumbled on Monday, with Japanese shares at one point exceeding their 1987 “Black Monday” loss, as fears of a U.S. recession prompted investors to dump risk assets and wager on Federal Reserve rate cuts to rescue growth.FRIDAY FLOWSHedge funds, as of Friday, sold Japan-related assets at the highest pace since COVID but exposure to the region did not fall, as fleeing long positions they U-turned and added short positions. A short trade bets that the value of an asset will fall. Index and exchange-traded fund products led two thirds of the selling activity in Japan. Outside of this, tech and industrial sector stocks were the most net sold on Friday, said Goldman. Just before the markets turned, during July, Japan saw the highest influx of hedge fund trades in nine months, said the bank. Gross total and net allocations to Japan remained, on Friday, close to four-year highs, the bank added. More

“You only want to be that restrictive if you think there’s fear of overheating,” Goolsbee said in an interview on CNBC. “These data, to me, does not look like overheating.”His comments came amid a global stock market selloff that accelerated on Monday in the aftermath of a disappointing U.S. employment report on Friday and the Fed’s decision last week to leave interest rates unchanged. Fed officials, however, signaled they could cut rates at their next meeting in September. More

Standard DigitalWeekend Print + Standard Digitalwasnow $85 per monthBilled Quarterly at $199. Complete digital access plus the FT newspaper delivered Monday-Saturday.What’s included Global news & analysisExpert opinionFT App on Android & iOSFT Edit appFirstFT: the day’s biggest stories20+ curated newslettersFollow topics & set alerts with myFTFT Videos & Podcasts20 monthly gift articles to shareLex: FT’s flagship investment column15+ Premium newsletters by leading expertsFT Digital Edition: our digitised print editionWeekday Print EditionFT WeekendFT Digital EditionGlobal news & analysisExpert opinionSpecial featuresExclusive FT analysisFT Digital EditionGlobal news & analysisExpert opinionSpecial featuresExclusive FT analysisGlobal news & analysisExpert opinionFT App on Android & iOSFT Edit appFirstFT: the day’s biggest stories20+ curated newslettersFollow topics & set alerts with myFTFT Videos & Podcasts10 monthly gift articles to shareGlobal news & analysisExpert opinionFT App on Android & iOSFT Edit appFirstFT: the day’s biggest stories20+ curated newslettersFollow topics & set alerts with myFTFT Videos & Podcasts20 monthly gift articles to shareLex: FT’s flagship investment column15+ Premium newsletters by leading expertsFT Digital Edition: our digitised print editionEverything in PrintWeekday Print EditionFT WeekendFT Digital EditionGlobal news & analysisExpert opinionSpecial featuresExclusive FT analysisPlusEverything in Premium DigitalEverything in Standard DigitalGlobal news & analysisExpert opinionSpecial featuresFirstFT newsletterVideos & PodcastsFT App on Android & iOSFT Edit app10 gift articles per monthExclusive FT analysisPremium newslettersFT Digital Edition10 additional gift articles per monthMake and share highlightsFT WorkspaceMarkets data widgetSubscription ManagerWorkflow integrationsOccasional readers go freeVolume discountFT Weekend Print deliveryPlusEverything in Standard DigitalFT Weekend Print deliveryPlusEverything in Premium Digital More

Standard DigitalWeekend Print + Standard Digitalwasnow $85 per monthBilled Quarterly at $199. Complete digital access plus the FT newspaper delivered Monday-Saturday.What’s included Global news & analysisExpert opinionFT App on Android & iOSFT Edit appFirstFT: the day’s biggest stories20+ curated newslettersFollow topics & set alerts with myFTFT Videos & Podcasts20 monthly gift articles to shareLex: FT’s flagship investment column15+ Premium newsletters by leading expertsFT Digital Edition: our digitised print editionWeekday Print EditionFT WeekendFT Digital EditionGlobal news & analysisExpert opinionSpecial featuresExclusive FT analysisFT Digital EditionGlobal news & analysisExpert opinionSpecial featuresExclusive FT analysisGlobal news & analysisExpert opinionFT App on Android & iOSFT Edit appFirstFT: the day’s biggest stories20+ curated newslettersFollow topics & set alerts with myFTFT Videos & Podcasts10 monthly gift articles to shareGlobal news & analysisExpert opinionFT App on Android & iOSFT Edit appFirstFT: the day’s biggest stories20+ curated newslettersFollow topics & set alerts with myFTFT Videos & Podcasts20 monthly gift articles to shareLex: FT’s flagship investment column15+ Premium newsletters by leading expertsFT Digital Edition: our digitised print editionEverything in PrintWeekday Print EditionFT WeekendFT Digital EditionGlobal news & analysisExpert opinionSpecial featuresExclusive FT analysisPlusEverything in Premium DigitalEverything in Standard DigitalGlobal news & analysisExpert opinionSpecial featuresFirstFT newsletterVideos & PodcastsFT App on Android & iOSFT Edit app10 gift articles per monthExclusive FT analysisPremium newslettersFT Digital Edition10 additional gift articles per monthMake and share highlightsFT WorkspaceMarkets data widgetSubscription ManagerWorkflow integrationsOccasional readers go freeVolume discountFT Weekend Print deliveryPlusEverything in Standard DigitalFT Weekend Print deliveryPlusEverything in Premium Digital More

(Reuters) – Hurricane Debby has made a landfall near Steinhatchee Florida, in the Florida Big Bend, the U.S. National Hurricane Center (NHC) said on Monday.The hurricane was about 70 miles (115 km) south-east of Tallahassee, Florida, packing maximum sustained winds of 80 mph (130 kph), the NHC said. More

This prediction marks a substantial shift from earlier forecasts due to emerging economic indicators, with recent data prompting worries about the economy.The bank said the FOMC has largely succeeded in its mission to return inflation to its 2% target.However, “recent data suggest the risks to the ‘full employment’ part of the Fed’s dual mandate are rising,” they wrote in a note Monday, highlighting that payroll growth has decelerated, and unemployment is increasing, signaling potential labor market vulnerabilities.Currently, the stance of monetary policy is quite restrictive, notes Wells Fargo, writing: “As measured by the real fed funds rate, the stance of monetary policy is quite restrictive at present.”The bank argues that the FOMC needs to revert to a neutral policy stance swiftly to prevent a cycle of labor market weakness leading to reduced spending and further labor market deterioration.By mid-2025, Wells Fargo forecasts that the target range for the federal funds rate will fall to 3.25-3.50%, aligning with what many observers consider a neutral rate. They anticipate a series of cuts, including a 25 bps reduction in December, followed by an additional 25 bps cuts at the January, March, and June meetings in 2025.The bank explains that the urgency for these aggressive cuts stems from the need to prevent economic downturns.”The FOMC needs to get back to a ‘neutral’ stance of policy quickly or else it risks a vicious circle of labor market weakness.”With inflation nearing the target and the labor market showing signs of softness, Wells Fargo believes the FOMC will start this transition to a neutral rate as soon as possible. More