Fed Is One Bad Inflation Number Away From Hiking Rates, Dutta Says

Neil Dutta of Remax Standing Byte. Ready to jump into the conversation, Neil. Is the October rate hike on life support or not? How do you see things looking at this data and the data over the last week? Yeah. I mean, I could you could say that it's on life support, but to the point that you made earlier, which is one that I agree with, I mean, you still, I think, are really just one one more bad inflation number away from them pulling the trigger on a hike. I mean, if you think about going into next year, the Fed sees core inflation cooling to two and a half percent in 2027 on a q four over q four basis. And think about what we've seen in the first quarter of every year going back to 2023. You know, core inflation over that first quarter runs close to 4% at an annual rate. So the odds are, I think, that the Fed has to revise up its inflation, forecast, in the first quarter of next year. I mean, if they don't do it in December, it'll probably be by March. And so, you know, that's why I'm a little bit reluctant to kind of buy into the the dovish thesis wholesale. You know, it's true that unit labor costs have been low, and we continue to see very weak wage pressure. And that's welcome for the doves because it gives the Fed time to to move again. But at the same point, it's important for investors to to remember that unit labor costs have actually been consistent with the Fed's broader inflation objectives for years now. Right? There are lots of things actually consistent with the Fed's inflation target. True mean inflation has come down. Unit labor costs are low. The New York Fed just published a pay up, you know, their multivariate core inflation number, and that was weak. Lots of things are consistent with 2% inflation except for actual inflation. And so that kind of leaves me a little bit, you know, cautious around how much I'd I'd wanna lean into this dovish view. I mean, at the end of the day, they're all talking about above trend growth. And so, you know, it it leaves me... If you have above trend growth with inflation still above target, that's not really an environment where I'd wanna go along the front end of the yield curve.