UBS On-Air: Market Moves UBS On-Air: Paul Donovan Daily Audio 'Labor weakness still beats inflation increases'
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Oct 15, 2025 The podcast dives into the Federal Reserve's focus on labor market weakness over inflation concerns. It highlights challenges posed by the US government shutdown, which hinders accurate economic data reporting. Listeners learn about consumer behavior as savings are tapped into amid employment fears. Insights into China's September inflation data and its minimal global impact are shared. Additionally, the discussion touches on the French government suspending pension reforms for political stability, showcasing the intertwined nature of economics and politics.
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Labor Weakness Trumps Inflation
- Jerome Powell says US labour weakness currently matters more than rising inflation for Fed policy decisions.
- That view increases the likelihood of rate cuts despite recent inflation upticks.
Policy Now Driven By Private Data
- The US government shutdown means official US data are unavailable, forcing reliance on private surveys and anecdotes.
- That reliance raises questions about data quality but Powell has historically used such imperfect data when deciding policy.
Powell's Signal Amplifies Markets
- Powell's comfort with imperfect data means his signals carry outsized influence on market expectations.
- Investors have therefore reinforced expectations of Fed rate cuts.