Daily Market Color

New Voters Set to Join Fed’s Rate-Setting Panel in 2020


Four new voters will join the Fed’s rate-setting panel in January 2020.. As part of the FOMC’s annual rotation, the chiefs of the Cleveland, Philadelphia, Dallas, and Minneapolis banks will replace the leaders of the Boston, Chicago, Kansas City, and St. Louis Fed banks. Though the general market consensus is that there will be no further rate cuts in 2020, these new voters could potentially sway that prediction. Cleveland Fed President Loretta Mester and Philadelphia Fed President Patrick Harker both expressed the hawkish view that rates should not have been cute in 2019. Conversely, Dallas Fed President Robert Kaplan and Minneapolis Fed President Neel Kashkari, both historic doves, made cases for low rates. Kashkari believes that the economy is not at risk of overheating, especially given that inflation has remained below the central bank’s 2% target throughout the course of this economic expansion. Fed Funds futures currently point towards a minimal probability of any action by the FOMC at its next meeting (January 29th), with increased optimism around the strength of the US economy amongst market pundits as 2019 comes to a close. The 10-year Treasury yield is marginally lower to start today’s trading session – currently near 1.88%.



China reported a larger than expected increase in industrial profits for November. Industrial profits beat last year’s numbers by 5.4%, effectively reversing October’s dramatic 9.9% drop. Though these numbers seem great at first glance, a low base was reported a year earlier. In November 2018, profits fell by 1.8% leading up to December’s 1.9% decline. Due to these historic trends, 2019’s acceleration in industrial production and decline in producer prices cause markets to question its sustainability going in to 2020. In general, the positive data relieves some pressure on the People’s Bank of China, although futures markets continue to predict further easing.



Day ahead. The Energy Information Administration will be releasing their petroleum status and natural gas reports which provides details on inventory levels in the U.S. These figures might further prove the current economic growth, as demand for these products has historically been robust these year-end periods.


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