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It’s Fed day, and the overwhelming (but not universal) consensus is that the U.S. central bank will cut interest rates by a quarter-point on Wednesday — the third rate cut in a row.
To one long-time Fed watcher, that’s still not enough.
Joseph LaVorgna, chief economist for the Americas at French bank Natixis, tells MarketWatch that monetary policy is still too tight.
After all, he notes, the interest rate the Fed sets is still higher than most developed market long-term yields.

“The Fed needs to cut to un-invert the yield curve as the slope from fed funds to 10 years is still negative,” he says over email. The yield curve refers to the slope of the line measuring interest rates at different maturities — and an inverted curve has shorter maturities yielding more than longer ones.
And when’s enough cutting? “A steeper curve (and un-inverted) curve along with a weaker dollar and higher commodity prices will tell us the Fed has done enough,” he writes.
The trade-weighted dollar is nearly flat this year, and the International Monetary Fund’s index of primary commodities has fallen 1% through September.
The buzz
It’s a huge day on the economics calendar. ADP reported 125,000 private-sector jobs were created in October, as the U.S. government said third-quarter GDP grew at a 1.9% annual rate, a few ticks higher than markets anticipated. The Federal Open Market Committee interest-rate decision is due at 2 p.m. and Fed Chairman Jerome Powell steps to the microphone at 2:30 p.m.
Markets will be focused on what conditions Powell attaches to further lowering of interest rates. “In effect, the threshold for cutting could change from not seeing an improvement in the data – which is how we interpreted the guidance from the past several meetings – to needing to see some further deterioration,” said Jim Reid of Deutsche Bank.
Industrial bellwether General Electric GE, +0.00% said it narrowed its loss during the quarter as it raised its estimate of free cash flow for the year. Mattel MAT, +2.52% may rally after reporting better-than-forecast results and concluding an investigation into accounting practices. After the close, tech behemoths Apple AAPL, -2.31% and Facebook FB, -0.05% report results.
Markets
Perched just below record highs, U.S. stock futures ES00, +0.08% YM00, +0.03% leaned higher Wednesday morning.
Gold futures GC00, +0.15% crept higher, edging up to $1,493.60 an ounce. Basically, markets have been quiet.
Random reads
John Witherspoon, the actor with appearances in “Friday” and the animated series “The Boondocks,” has died at age 77.
The big question heading into Game Seven of the baseball World Series — whether Nationals ace Max Scherzer can be healthy enough to pitch.
Another streaming service set — AT&T’s T, -1.12% HBO Max to launch in May for $15 a month.
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