US: Fed rhetoric and data keep policy easing in view – Danske Bank

Danske Research Team highlights mixed US signals, with consumer confidence rebounding modestly and ADP data pointing to faster private hiring. Fed officials Goolsbee and Bostic sounded hawkish, stressing the need for clearer disinflation and warning on upside inflation risks. Despite markets pricing only a coin-flip for a June cut, Danske expects cooling real growth to trigger easing from June.

Hawkish Fed talk versus easing outlook

"In the US, the Conference Board's consumer confidence measure rebounded modestly in February to 91.2 (cons: 87.0, prior: 89.0), though the indices remain at weak levels. Future expectations recovered, while the current situation assessment weakened further. The widely followed 'jobs plentiful' index also rose modestly, but remains at low levels compared to pre-covid."

"ADP's latest weekly private employment growth estimate came in at 12.75k. This is a 4W rolling average until 7 February, up from a revised 11.50k last week. At face value, it suggests strengthening jobs growth momentum, marking the fastest pace of hiring since late November."

"On US monetary policy, Chicago Fed's Goolsbee (non-voter) took a notably hawkish stance, emphasising the need to see clear progress on inflation before supporting further rate cuts. His dissent already in December to hold rates steady underscores his position as one of Fed's most hawkish participants. Atlanta Fed's Bostic (non-voter) highlighted the economy's resilience to last year's trade shocks and current AI-driven growth, supporting a 'mildly restrictive' policy, while cautioning that resurging inflation could warrant rate hikes."

"Markets are currently pricing a coin flip of a cut in June. However, we expect cooling real growth will prompt the Fed to resume policy easing already in June."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)