June 5, 2019 Jerome Says He's Flexible; Market Hears "Powell Put" by Lester Murray

In yesterday's speech at the Chicago Fed, FOMC Chairman Jerome Powell expressed concern about ongoing trade issues and the potentially negative consequences they could have for America's economic well-being. He reminded everyone that the situation is being closely monitored and that policy-makers "...will act as appropriate to sustain the expansion." Investors as a group seem to be interpreting those remarks, and others, to mean that a rate-cut is on the way. That is yet to be determined, but that hasn't kept market participants from pricing in that outcome.

As one would expect, equity and credit markets have been buoyed by the prospect of a lower policy rate and perhaps an un-inversion of the yield curve.  The Ten-Year's yield is back below 2.10% and domestic equity markets are poised to open with green numbers.  In less positive news, the privately compiled ADP Employment report reported just 27k new jobs in May, the lowest addition since 2010.  Surveys suggested a gain of 185k; about what is expected for the BLS to report come Friday.