Maybe one more instead of two?/Bears at lowest of year/Remember Helen of Troy?/Another BoJ rate hike?

Voting Fed member Mary Daly yesterday said while she "fully" was on board with the Fed's 50 bps cut last month, she is leaving open the possibility that we only get one more rate cut of 25 bps over the following remaining two meetings rather than two. She said at an event yesterday "I think that two more cuts this year, or one more cut this year, really spans the range of what is likely in my mind, given my projection for the economy."  Rate cut odds in the fed funds futures market is at 76% for two more this year. The 2 yr yield is at the highest level since mid August while the 10 yr yield at 4.08% was last seen in late July. 

I mentioned Monday my belief that Friday's robust payroll number didn't square with other stats and anecdotes and the confusing nature of it all. This is what the Fed minutes revealed yesterday as they too try to figure out what's going on. "Many participants observed that the evaluation of labor market developments had been challenging, with increased immigration, revisions to reported payroll data, and possible changes in the underlying growth rate of productivity cited as complicating factors. Several participants emphasized the importance of continuing to use disaggregated data or information provided by business contacts as a check on readings on labor market conditions obtained from aggregate data."

There was nothing new mentioned on the balance sheet in the minutes and it will continue to shrink even as they cut rates further. As of 10/2, it stood just above $7 trillion, still well above where it stood in February 2020 and as a % of GDP it stands at about 25% vs 19% in February 2020.