Fed Has Room for More Rate Cuts, Pimco's Wilding Says

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00:00How much have you been able to plug the data from your end of things based on alternative

00:04sources, based on earnings, based on sentiment surveys?

00:09Yeah, I mean, when we look at the range of data, basically the conclusion that we come

00:15to is that the momentum has continued to slow, but that slowing has still been relatively

00:21gradual.

00:22So we're not falling off a cliff.

00:23The labor market is not, you know, sort of plunging into the abyss.

00:28But nevertheless, it's continuing to lose momentum.

00:31You know, I think maybe a little bit more concerningly is that we have started to see some early

00:36indications of actual separations or job losses picking up.

00:41We've seen various corporate announcements on this.

00:44You know, the Challenger survey, which leads warn data, which is companies have to warn

00:50their states of layoffs.

00:52You know, that has started to tick up.

00:53That also tends to lead claims, you know, by around three months.

00:56So it does suggest there is, you know, some potential for for job losses.

01:00You know, now, ultimately, you know, how big that that will be is obviously difficult to

01:06gauge.

01:06But, you know, I think there is enough evidence here for the Fed to continue to to cut rates,

01:11you know, at least one more time from a risk management perspective.

01:14You know, there's this debate right now, inflation or jobs and the dual mandate very much in conflict.

01:18And Eric Johnston of Cantor Fitzgerald was on the show earlier this morning.

01:22And he said, ultimately, it comes down to, yes, sure, the labor market has seen some cracks

01:27or at least some slowing down.

01:29It seems as though the Fed has abandoned their goal of two percent inflation.

01:33And for the most part, that is going to drive policy to be more accommodative and responsive

01:37to the labor side of things.

01:39Do you agree with that?

01:40No, I actually think that the Fed is trying to be, you know, I think they're trying to

01:47be more forward looking here and they're trying to assess, you know, they're very wary that

01:51inflation is above target.

01:53I think they probably would have moved faster.

01:56We wouldn't be debating December if inflation were lower right now.

02:01So I certainly think that the Fed is is is has their eye on inflation as well.

02:06You know, I think the big question in terms of these increasing downside risks to the labor

02:09market, you know, is is is if you do if those risks do materialize, you have opening of slack

02:15that is ultimately going to put downward pressure on inflation in the future.

02:18So I think you have to weigh both sides of the mandate here.

02:21The Fed seems to be doing that, you know, and that's why they're you know, some of them

02:25are more cautious around December.