UBS On-Air: Market Moves UBS On-Air: Paul Donovan Daily Audio 'Beige or red flags?'
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Sep 4, 2025 The Federal Reserve is weighing tough decisions on interest rates as labor markets show signs of weakening and inflation remains a concern. Recent insights from the Beige Book highlight the impact of tariffs on pricing. Meanwhile, the Bank of England is sticking to its guns on interest rates despite falling inflation. There's also a captivating comparison of bond market performance between the UK and Europe, paired with the uncertainty rippling through labor market indicators. The economic landscape is definitely a topic to watch!
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What The Fed Must Answer
- The Fed's decision rests on how much the economy slows, how high inflation goes, and its persistence.
- It must also consider whether rate changes will alter those outcomes.
Data Lean Toward Rate Cuts
- Recent data point toward easing rather than tightening by the Fed.
- Job openings fell and smaller firms showed notable declines in vacancies, signalling labour market weakness.
Beige Book Shows Hesitation
- The Beige Book showed more uncertainty and weaker labour market anecdotes across districts.
- Seven of 12 districts cited uncertainty as a reason firms hesitated to hire.