Monetary Policy Update
Here’s what Federal Reserve Chairman Powell said about the decision to hold Federal Funds rate steady at the September FOMC meeting:
“The fact that we decided to maintain the policy rate at this meeting doesn’t mean that we’ve decided that we have or have not at this time reached that stance of monetary policy that we’re seeking.”
More to the point, the “Dot Plot” consensus shows a 25-basis point rate hike at the next meeting, and for 2024, rolled out over the year, a drop of 50 basis points. Interestingly, that is more hawkish than the June meeting outlook, when the policy maker consensus saw a 100 basis point drop in future rates.
Will that be enough to restrict inflationary pressure? That’s to be determined. Powell also said, “You know sufficiently restrictive is only when you see it. It’s not something you can arrive at with confidence in a model or in various estimates.”
Notably, the Fed’s post meeting statement characterized economic growth as “solid” – an upgrade from the previous meeting’s statements which used the term “moderate.” And employment gains were characterized as having “slowed” through remaining “strong.”
In short, the Fed’s monetary policy stance is still cognizant of the proverbial “fork in the road” which lies ahead.
The Watch List: What We Are Monitoring
- Black Seas Conflict There appears to be waning western support for Ukraine. Last week, the GOP continued to push back on authorizing more funding, while Prime Minister Morawiecki said that Poland is “no longer transferring any weapons to Ukraine” amidst a diplomatic dispute over Ukrainian grain exports.
- Insurance Shortages A federal program that provides critical flood insurance to U.S. homeowners is set to lapse, unless renewed by month’s end, potentially stranding new home buyers in need of coverage.
- China & Taiwan As profiled in this week’s Article of Interest, China continues to show military aggression against Taiwan.
- U.S. Government Shutdown The risk is back unless House Republicans and the Democratic-controlled Senate can agree on a stopgap spending bill. Of particular concern is that the House is set to debate deep cuts in spending for USDA and FDA.
Upcoming Events & Catalysts
Monday, 9/25/2023
- Chicago Fed National Activity Index and Dallas Fed Manufacturing Survey
- USDA Grain Inspections, Crop Progress, Food Price Outlook
- Yom Kippur Holiday
Tuesday, 9/26/2023
- Case-Shiller Home Price Index, Philadelphia Fed Non-Manufacturing Survey, Consumer Confidence, Richmond Fed Manufacturing Survey, Dallas Fed Texas Retail Outlook
- Farm Foundation webinar, “What to Expect from the 2013 Farm Bill Now”
Wednesday, 9/27/2023
- Durable Goods, Dallas Fed Energy Survey
- EIA Weekly Ethanol Production, Livestock and Meat Domestic Data
Thursday, 9/28/2023
- 2Q GDP (3rd reading) – median forecast is 2.3%, Initial Jobless Claims, Pending Home Sales
- Weekly Crop Export Sales, Hogs & Pigs Report
Friday, 9/29/2023
- Personal Income and the PCE Deflator, Michigan Consumer Survey (Final), New York Fed Staff Nowcast, Final trading day of 3Q 2023.
Saturday, 9/30/2023
- End of fiscal year for the government, last day congress has to authorize spending in order to avoid a government shutdown.
Numbers of Interest
- $28 billion Purchase price that Cisco Systems (CSCO.O) is paying to buy Splunk in order to capitalize on the boom in artificial intelligence.
- $370 million Estimated agriculture losses in Florida from Hurricane Idalia.
- 97% Brazil’s second-crop corn harvest was about 97% completed last week, providing certain Brazilian farmers the chance to start planting their primary soybean crop.
- $407,100 U.S. median home sales price in August, up 4% over last year.
- -15.3% Year/year decline in existing homes sales in August 2023.
- 250,000 # of temporary employees that Amazon plans to hire for the 2023 holiday season.
- 24% Estimated office vacancy rate in 18 Chinese cities, which compares to the June 2023 high of 18.2% in the U.S.
- 327,000 Number of public sector jobs created in the U.S. thus far in 2023, equal to 20% of all new jobs now vs. 5% in 2022.
Kenneth Scott Zuckerberg is Lead Industry Analyst, Farm Supply & Biofuels, CoBank
