Macroeconomic Analysis

No, 3% inflation doesn’t guarantee rate cuts Quick question I keep hearing on trading calls: CPI’s got a 3-handle again, so we’re getting cuts, right? Short answer: no. Longer answer: the Fed doesn’t set policy off a single headline print, and certainly not off the psychological comfort of a “3.” The target is 2% PCE, not CPI, and it’s about a durable path to 2%, not a vibe check because a number looks tidy on CNBC. Here’s where people keep slipping in 2025. Early in the year, markets priced a fast cutting cycle the minute CPI cooled a bit, only…

No, the Fed can’t just “pick 3%” and call it a day No, the Fed can’t just “pick 3%” and call it a day. I get why that idea keeps popping up, 3% feels close enough to what we’ve been living with, and wouldn’t it make everything cheaper-feeling without more rate pain? But that’s not how this works. The Fed’s inflation goal isn’t a dimmer switch; it’s the anchor for how households, CFOs, and bond desks set prices, wages, and borrowing costs. Since 2012, the formal target has been 2% PCE inflation. Changing that wouldn’t be a tweak. It would…

What the pros watch when headlines get loud Every Thursday morning, my phone lights up with the initial claims print and at least three texts asking, “Rate cuts now?” Cute. Pros don’t trade a single number; they map the trend, the revisions, and how it slots into the Fed’s reaction function. Especially in Q4 2025, when the market is hypersensitive to any hint of a pivot, one noisy week can move two-year yields 8-12 bps and then snap right back. I’ve seen this movie. Twice. Here’s the frame. Initial claims are the first-time filings, they’re fast, volatile, and often revised.…

The not‑so‑secret secret on rate cuts Here’s the not‑so‑secret secret on rate cuts: they don’t make your grocery bill cheaper by Saturday, and they definitely don’t shrink a 30‑year fixed mortgage unless you go through the joy (and cost) of refinancing. Rate cuts work. They just don’t work the way headlines make it sound, and they don’t work on your timeline. In Q4 2025, whether the Fed trims again or pauses a beat, the transmission looks the same. What actually changes fast? Borrowing costs on stuff tied to variable rates. Think credit cards, HELOCs, adjustable‑rate mortgages. Those can reset within…

The quiet tell traders watch every Thursday at 8:30 There’s a quiet tell that pros watch every Thursday at 8:30am ET, and no, it’s not the espresso machine warming up. It’s initial jobless claims. On Wall Street, claims are the earliest weekly read on whether the labor market is softening, and they hit before the big, glossy monthly reports everyone tweets about. I’ve sat on trading floors where a 10k swing in claims changed the tone of the day, risk got trimmed, 2‑year yields slipped a few basis points, and the chat rooms lit up with “is this the turn?”…

The not-so-secret tell: the Fed cares about trends, not headlines Here’s the not-so-secret tell: the Fed cares about trends, not headlines. A single ugly jobs Friday doesn’t swing policy. A pattern does. Pros watch whether the labor market is drifting, not whether it just had a bad hair day. That’s why the question people are really asking, often without saying it, is “will-rising-unemployment-trigger-fed-rate-cuts?” The answer depends on trend signals that stack up over weeks and months, not one print that lights up X for six hours. The cleanest one is the Sahm Rule. Quick version: it triggers when the three-month…

What pros do when rates move: they map the lags, not the headlines Here’s how the pros handle rate moves in Q4 2025: they map the lags, not the headlines. Seasoned PMs and CFOs sort everything into two buckets before they touch a budget or a portfolio, what resets fast when the Fed moves, and what doesn’t. That sounds obvious, but it’s the difference between a clean Q4 and a messy one. Variable-rate debt like credit cards and HELOCs adjust in weeks; rents and a lot of services prices take 6-18 months to reflect tighter or easier policy. And they…

No, rate cuts don’t magically fix everything Quick reality check: a Fed rate cut changes the price of money fast. It doesn’t rewrite wage contracts, renegotiate your office lease, or refill a retailer’s margin in time for Black Friday. I’ve seen too many investors chase the first cut like it’s a green light, only to get sideswiped by sticky prices or a pickup in layoffs. And yes, I’ve worn that t‑shirt, twice. The plumbing of credit responds quickly; real-world balance sheets don’t. Here’s what you’ll actually get out of this section, and I’ll be blunt about it because it’s Q4…

The priciest mistake: investing like it’s still a 2% world If there’s one error that quietly drains the most money, it’s anchoring your portfolio to yesterday’s inflation and rate regime. It’s Q4 2025. Higher-for-longer isn’t a headline anymore, it’s the baseline. I still hear stock pitches that assume cash is free, inflation slides back to 2% on autopilot, and duration risk is someone else’s problem. That worked in the 2010s. It’s a leak in your P&L today. Quick reality check. The policy rate lived at 0-0.25% for seven years after the GFC (2008-2015) and again in 2020-2021. CPI inflation averaged…