The main implication of this tightening is not related to US exceptionalism but rather an indication that the rest of the world is way ahead of our incompetent Federal Reserve

We are forecasting that US GDP growth accelerates from 2.7% in 2025 to 3.2% in 2026  as US growth returns to normal levels due to the dramatic reduction in mortgage rates that had caused a recession in the residential and construction industries.   Many forecasters. such as the CBO which assumes a 1.8% long term growth rate, are consistently pessimistic about US economic growth, but the average post WWII US GDP growth rate is 3.15%.  Consequently, our forecast of 3.2% is in line with...

The employment survey showed ongoing weakness in the job market with only 50k jobs created vs. expectations of 70k.  The net two-month revision was also negative with a revision down of 76k.  The household survey, however, showed that the unemployment rate declined to 4.4% from 4.6% last month.    The most important number was the unemployment rate which is the key factor the Fed focuses on.  Consequently, rates moved up slightly and Fed Funds futures priced in less Fed easing at the margin. ...