In the New York Fed's September survey of 1,200 households, five-year expected inflation came in at 3.0%, falling for a second consecutive month and marking the lowest level since June. One-year expectations stood at 3.9%, above the forecast of 3.64% and the highest since May 2023, while three-year expectations rose to 3.25% from 3.19% in August. By category, gasoline prices stood at 4.8%, the highest since May, with expectations of higher fuel prices particularly notable. On the employment front, the probability of losing one's job fell to 13.52%, the probability of voluntarily leaving a job rose for a third straight month to 19.86%, and the probability of finding a new job within three months rose to 46.11% from 45.42%, suggesting a healthy labor market. Growth in household spending rose to 5.51% from 5.23% in August, while the probability of falling behind on debt payments within three months fell to 12.2% from 13.16%. In the minutes of the September FOMC meeting released by the Fed, all 19 officials supported a rate hike, and most saw a strong likelihood that an additional rate increase before year-end would be appropriate, but with no sense of urgency, the probability of a rate hike at the October FOMC has fallen below 20%, and momentum for buying dollars is also beginning to fade.
FOMC minutes show all 19 officials backed a hike and most saw another increase as appropriate, though October odds fell below 20%, keeping the policy rate path elevated.
Most Fed officials still see an additional rate increase as appropriate, keeping upward pressure on the 10-year Treasury yield.
