Luxury Stocks Surge as Fashion Giants Face High-Stakes Holiday Season 
RBA Deputy Governor Hauser Says Policy Outlook Hinges on Whether Cash Rate Remains Restrictive 
Global EV Sales Surge 23% in October Driven by Strong Demand in China and Europe 
Asian Stocks Decline as Investors Rotate Out of Tech Ahead of Key Hong Kong Earnings 
Gold Prices Extend Gains in Asia as Economic Uncertainty Lifts Safe-Haven Demand 
Yen Near Record Low as Japan’s New PM Backs Slow Rate Hikes; Aussie Rises on Strong Jobs Data 
Asian Stocks Edge Higher as U.S. Nears End of Record Shutdown and Fed Cut Bets Rise 
U.S. Regulators Move to Ease Capital Rules, Boost Banks’ Treasury Holdings 
Australia’s Job Market Surges in October, Easing Pressure for Further RBA Rate Cuts 
Japan’s JPYC Stablecoin Could Reshape Bond Markets and Challenge BOJ’s Monetary Control 
Asian Stocks Edge Higher as Hong Kong Tech Surge Offsets Softbank’s Nvidia Sale 
U.S. Trade Policies Cast Uncertainty Over Ireland’s Corporate Tax Windfall 
Fed Officials Divided Over December Rate Cut Amid Inflation and Labor Market Concerns 
U.S. House Passes Bill to End Record-Breaking Government Shutdown 
Wall Street Futures Rise as U.S. House Passes Bill to End Longest Government Shutdown 
Japan’s PM Takaichi Urges BOJ to Drive Inflation Through Wage Growth, Not Rising Prices 
Taiwan’s Economy Set to Approach 6% Growth in 2025 Amid AI-Driven Semiconductor Boom 
During its remaining policy meetings this year, the Federal Reserve is expected to downshift to smaller interest rate cuts. However, a sharp downturn in the labor market could prompt the central bank to implement a more significant Federal Reserve rate cut to protect the economy, according to analysts.
"Despite the faster-than-expected first cut, the tone of the meeting, subsequent communications, and recent U.S. economic data lead us to expect two 25 basis point cuts into year-end," analysts at Morgan Stanley wrote on Wednesday.
A larger Federal Reserve rate cut remains on the table, as weaker employment data could cause the Fed to adjust its policy more aggressively. Analysts warn that job gains falling below 100,000 could pose a challenge to the forecast for two 25 basis point cuts. The September payrolls report, expected this Friday, is predicted to show an addition of 144,000 jobs, slightly up from August’s 142,000, with the unemployment rate holding steady at 4.2%.
Labor Market Holds Key to Future Federal Reserve Rate Cut Decisions
The Federal Reserve rate cut in September, a 50 basis point reduction, surprised many experts who anticipated a smaller 25 basis point cut at the start of the easing cycle. Since then, Federal Reserve officials have consistently emphasized that labor market conditions will significantly shape decisions regarding further rate reductions.
“A surprise to the weak side... would pull me much further into really needing another dramatic move,” said Raphael Bostic, President of the Atlanta Fed, in a Reuters interview.
Fed Chair Jerome Powell, in a speech on Monday, tempered expectations of another large Federal Reserve rate cut, suggesting the likelihood of two more 25 basis point reductions “if the economy performs as expected.”
While the labor market shows signs of slowing, robust consumer spending offers reassurance to Fed officials that a "soft landing" for the economy is possible without entering a recession. In August, consumer spending rose as expected, especially in the service sector, tracking at 3.1% growth for the third quarter.
Morgan Stanley expects a broad deceleration of the economy towards year-end but believes a recession is unlikely. The bank projects real GDP growth at 2.2% for the fourth quarter compared to the same period last year. Meanwhile, inflation continues to moderate, with the core personal consumption expenditures price index — the Fed’s preferred gauge — aligning with a 2.6% forecast for 2024.
