Stocks were on course for gains on Monday, and gold prices were soaring as investors tried to make sense of lawmakers’ last-minute bid to prevent a government shutdown.Futures tracking the Dow Jones Industrial Average were up 116 points, or 0.3%. S&P 500 futures also rose 0.3%, and contracts tied to the tech-heavy Nasdaq 100 gained 0.4%.The dollar slid 0.2% against a weighted basket of its peers, dragged down by the shutdown worries. Gold climbed 1% to hit a record high of just under $3,849 an ounce. The yield on the benchmark 10-year U.S. Treasury note fell 3 basis points to 4.15%. Continue reading →

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Chicago Fed President Austan Goolsbee expressed caution about lowering interest rates as the U.S. economy grapples with the forces of slower growth and a weaker labor market.
“With inflation having been over the target for four and a half years in a row and rising, I think we need to be a little careful with getting all really up-front aggressive,” he told CNBC.

Chicago Federal Reserve President Austan Goolsbee expressed caution Tuesday about lowering interest rates as the U.S. economy grapples with the forces of slower growth and a weaker labor market.
While he joined the rest of the Federal Open Market Committee last week in voting to cut the central bank’s key borrowing rate, he told CNBC that further moves would depend on economic progress.

“I’m OK with moving to be in a better spot, and I think eventually, at a gradual pace, rates can come down a fair amount if we can get this stagflationary dust out of the air,” he said during a “Squawk Box” interview. “But with inflation having been over the target for four and a half years in a row and rising, I think we need to be a little careful with getting all really up-front aggressive.”
The FOMC voted 11-1 to lower the federal funds rate to a range of 4%-4.25%, the first easing this year. Committee members have worried about the impact that tariffs will have on prices. While inflation has stayed above the Fed’s 2% target, the pace of price increases has accelerated only modestly since the tariffs came on line in April.
Much of the Fed’s calculus comes down to finding the “neutral” rate that neither boosts nor restricts growth. Projections released following the meeting show the committee thinks that the neutral level would be consistent with a funds rate around 3.1%, an area where Goolsbee said he feels “comfortable.”
That in turn would imply bringing down the benchmark rate another percentage point, which the FOMC “dot plot” indicated would come with two more cuts this year followed by one each in the subsequent two years.
“I think the neutral rate of interest is somewhere below where we are right now,” he said. “If we’re on a path to get inflation back down to where it’s supposed to be, and where we promise we’re going to bring it, I think rates can come down some.”

While inflation numbers will be watched closely, so will the labor market. Recent trends have indicated a substantial softening in hiring, though the unemployment rate of 4.3% is low in historical terms.
The Chicago Fed on Tuesday introduced its own labor market monitor, including a forecast for the unemployment rate as well as other real-time labor statistics. The district’s data indicates the unemployment rate for September will be unchanged.
Goolsbee said the reports will come from 11 different data sets that will compute an jobless rate projection as well as estimates for layoffs and other separations and a rate of hiring unemployed workers. So far, the data is showing “a lot of stability” in the labor market, he said. Continue reading →

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