FOMC Expected to Announce 25 bp Rate Cut Tomorrow

Yields unchanged ahead of tomorrow’s Fed decision. Treasury yields traded in a 3 bp range today as markets await tomorrow’s FOMC meeting decision, where a 25 bp rate cut is fully priced in by futures markets. Tomorrow’s meeting could see dissents on both sides, with Miran potentially in favor of a larger cut and Schmid and Musalem potentially voting for a pause. Yields ended nearly flat across the curve, with the 2-year yield at 3.49% and the 10-year yield at 3.98%. Meanwhile, tech mega-caps rallied today, pushing the S&P 500 and NASDAQ 0.23% and 0.80% higher, respectively.

ADP Research begins releasing weekly data. ADP Research announced that it will begin releasing weekly US payrolls data every Tuesday, in addition to its standard monthly print. Today’s preliminary weekly report showed the four-week moving payrolls average increased by 14,250 in the period ending October 11. This follows the monthly report released on October 1 that highlighted a sharp decline in private sector payrolls, with 32k jobs lost compared to 11k jobs added. ADP previously reported their weekly data to the Fed, but as of last week is no longer providing the figures to the central bank. In a call with reporters today, ADP Chief Economist Nela Richardson declined to explain why the government partnership ended. Senator Elizabeth Warren also sent a letter to the firm urging them to make the data publicly available, especially as the government shutdown has limited access to labor data.

The US and Japan announce potential projects for $550 billion investment vehicle. Possible projects for the US-Japan investment fund were named today, with investments expected from companies such as SoftBank Group, Westinghouse, and Toshiba Corp., and projects ranging in size from $350 million to $100 billion. Investment sectors range from energy to AI, and a fact sheet from Japan’s trade ministry mentioned interest in other areas including semiconductors and critical minerals. Under the deal, the US is to receive 90% of any investment profits and is also said to have final say on investment decisions. Despite President Trump saying his administration is free to “invest as we like”, Japan is said to have some input, and Japanese trade minister Ryosei Akazawa stated, “we intend to promote the mutual interests of Japan and the US, expand cooperation aimed at ensuring economic security, and foster Japan’s economic growth.”