Lates News

Former Dallas Fed President Robert Kaplan said the bond market is being too aggressive in pricing in Fed rate hikes. Kaplan said the Fed's September rate hike was the right decision, and another hike in December may also be a reasonable choice, but it should probably pause in October. He said inflation is "concerning" on both a monthly and year-over-year basis. If monthly inflation data is annualized, it is even close to 3%. Kaplan noted that the Fed's dot plot shows one more rate hike this year, but financial markets have already moved beyond that expectation. As of Thursday morning, market pricing showed at least three more rate hikes by June next year. "There is no doubt that AI infrastructure and applications are booming. In addition, defense spending is also very strong for obvious reasons." Kaplan said, "But if you look at the auto industry, housing-related companies, and those serving low- and middle-income consumers, you will find that although business is not bad, it is overall quite weak or sluggish. So, in my view, those areas of the economy that are most affected by the federal funds rate are not overheating right now."