Pay attention to Chairman Powell's decisions rather than the strength or weakness of economic indicators

The US employment statistics (September) were solid, but they were within the range of the Federal Reserve's expectations, and were not figures that could change monetary policy. While student loan payments are being resumed and excess deposits are being exhausted, QT has begun to be effective in the market, and there is also a view that an increase in US stocks is not expected in the future.

The labor market is strong even in the current situation where inflation and wages are peaking out, and there is a difference between ① dealing with interest rate hikes (Volker style) or ② whether to stop interest rate hikes and deal with them for a long period of time at the current level (Powell style). Chairman Powell has already selected the latter, which will be addressed over a long period of time, but the market is concerned that interest rate hike policies will be changed if strong economic indicators come out. This is why long-term bonds are being sold.

At the press conference after the FOMC in July, it is said that it was Chairman Powell's mistake that left room for further interest rate increases depending on future data on monetary policy. The IMF General Meeting will be held in Morocco starting this week (10/9-15). The monetary policy of the United States has clearly changed in the past two years due to discussions between Japan, the US, and Europe. Subsequent FOMC confirmed changes in monetary policy.

I can fully consider similar developments this year. I think what Chairman Powell should do is to clearly dispel market concerns in the unlikely event of a further interest rate hike. What we should pay attention to in the future is not the strength or weakness of economic indicators, but the direction of the decisions made by Chairman Powell at the FOMC on November 1. If the final interest rate increase decision becomes clear, long-term interest rate increases will stop, and if not, long-term interest rate increases will continue.