Fed’s Bostic: Rise in unemployment has been ‘far less’ than would be typical

• Rise in unemployment would be far less than would be typical in the case given the reduction in inflation
• Fed is in a very strong position right now
• Fed can let restrictive policy continue to work to slow down inflation; expect the process will remain ‘orderly’
• Families are catching up to past price increases.
• Pain of higher prices is easing and sentiment should follow
• Goods inflation is back to pre-pandemic levels
• Services inflation is moving more slowly and not expecting big drops
• Many economic measures are back at levels seen in the years immediately before the pandemic
• At this point shorter-term measures of inflation, such as over three and six months, are more important. They are pointing in a positive direction
• Not comfortable declaring victory. Fed needs to ‘remain diligent’ and ‘short run attentive’
• Top line job numbers have been pretty strong.
• The recent strength in jobs has been focuses in a relatively small part of the economy
• Concentrated job growth means that slowing is occurring. Question is if job growth overall falls off a cliff.
• Sees two 1/4% rate cuts by the end of the year (the Fed forecast 80 basis points of cut in their most recent dot-plot).
• Risks are balanced with employment slowing, but inflation still above target. Bias is still to stay tight.
• Policy will still need to be restrictive at the end of the year, but progress on inflation will warrant lower rates
• Wants to be sure that inflation control is ‘really, really’ there before taking too many steps
• Outlook now is not for inflation to rebound, but Fed still needs to pay attention

Bostic is speaking at the Atlanta Rotary Club

As Bostic speaks, US stocks are stretching to new session highs. The NASDAQ is leading the way with the gain of 1.5%. The S&P index is up 0.73%. The Dow Industrial Average is still lower but has erased most of its declines and is down only -0.06%. Shares of Boeing are dragging down that index with a decline of -6.36% (accounts for about 100 dow points).

Chevron (-1.56%) and JPMorgan (-1.45%) are also lower, but 18 of the Dow 30 are higher led by Intel which is up 3.79% today.

In the US debt market yields are lower:

• 2- year yield 4.322%, -6.9 basis points
• 10-year yield 3.977%, -6.44 basis points
• 30-year yield 4.150% -5.0 basis points