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Today’s Headlines, Fed Minutes, and UK Labour Market

Humanitarian crisis dominates headlines, release of FOMC's minutes this evening, and labour market report from the Recruitment and Employment Confederation.

This morning’s headlines continue to be dominated by developments in Israel, Gaza and the wider region, in addition to the broader geopolitical implications of the conflict and humanitarian crisis.

Today, the FT are reporting that “Israel has mobilised 360,000 reservists in preparation for a ground operation in Gaza” as the death toll mounts. This comes as the BBC are reporting that “Israel is expected to launch a ground offensive on the Gaza Strip soon”. Jonathan Conricus, the IDF’s spokesperson told the BBC that Israeli forces are “close to the Gaza Strip getting ready to execute the mission that we have been given by the Israeli government – and that is to make sure that Hamas at the end of this war won’t have any military capabilities by which they can threaten or kill Israeli civilians”. According to the Israeli Army, the first cargo plane of armaments have also landed from the US, following Washington’s earlier announcement that it would send Naval warships, an aircraft carrier and military jets including F-35s to Israel.


Headlines around a suspected ground invasion follow Israel’s announcement of a siege of Gaza last Saturday, and this morning the head of the Palestinian Energy Authority has indicated that the only power station in Gaza will run dry of fuel today. Here, FP are reporting that “Of the region’s 2.3 million residents, one-tenth of the total population is now fleeing inward to seek protection from Israeli airstrikes.”

This comes as the BBC are reporting that the death toll in Israel has reached 1,200 while more than 900 people have been killed by Israeli air strikes on Gaza.

Earlier this week, three Israeli soldiers were also confirmed killed in a fight with militants on the border with Lebanon. Three militants from Hezbollah were also confirmed killed. Reports of subsequent exchanges of fire were also given, with Hezbollah saying that they fired artillery in the Northern Israeli area of Avivim. The Israeli army also stated yesterday that it fired armaments into Syria retaliating after it identified “launches” from Syria which had landed in Israel.

All Eyes on Fed Minutes

This evening will see the release of the FOMC’s minutes for their last policy meeting back in September. Here, markets will be looking for any further insight into policy makers’ monetary policy stance to try to gain an indication on the Fed’s future rate path. On 20 September while New York met market expectations in holding rates, policy makers signalled support for the possibility of another hike this year. With the Fed maintaining their benchmark policy target rate at 5.25-5.5% (its highest level in 22 years), their Dot Plot also indicated that there would likely be less rate cuts in 2024, namely two cuts instead of four. Such a hawkish hold, accompanied by a flurry of strong data, fed into further dollar strength.

Nevertheless, as we looked at yesterday, Reuters are noting that the “CME Group’s FedWatch showed the estimated chance of a rate hike at the Fed’s upcoming meeting plummet from around 27% at the start of the day to around 14% after the two officials spoke. The chance of a rate increase at the December meeting fell from around 36% to 24%.” This came on the back end of the Vice Chair of the Fed Philip Jefferson indicating that “We are in a sensitive period of risk management, where we have to balance the risk of not having tightened enough, against the risk of policy being too restrictive”. Jefferson further reiterated the time-lag implications of rate hikes, noting that the full impact of the Fed’s monetary tightening was yet to be felt. As such, there is seemingly a disparity in what the market projects the Fed will do next and what their Dot Plot released on 20 September suggests. Hence, markets will be keeping a close eye on today’s minutes to try to gain some clarity on the Fed’s future path.

UK Labour Market

This morning’s UK labour market report from KPMG and the Recruitment and Employment Confederation found that employers have cut their job vacancies for the first time in over two-and-a-half years”, though the fall in job vacancies was cited as being marginal. The report also stated how “Improved demand for short-term staff meanwhile helped to drive a modest uptick in temp billings that was the most pronounced since April.”

Regarding pay, the report (which is sent out to some 400 UK recruitment and employment consultancies) noted how “pay pressures continued to weaken, with rates of starting salary inflation and temp wage growth edging down to 30- and 31-month lows respectively”.

Here, Neil Carberry, REC Chief Executive, said: “This feels like a market that is finding the bottom of a year-long slowdown. And the relative buoyancy of the private sector is likely to be driving this more positive outlook – while vacancies are now dropping, they remain robust in the private sector by comparison to the public”. All eyes now turn to the ONS’ latest release of unemployment, wage growth and economic activity rates on 17 October.



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