Jim Caron

It's really a question in terms of how we think the Fed starts to react to this.

Does the Fed now start to see a clear runway to cutting rates maybe more aggressively because inflation, as we just saw, is maybe coming down a bit, maybe a bit faster than many people are expecting?

I'm still in the camp that there's maybe one more cut this year, possibly two.

And I think that's pretty much well in the price at this point as far as where the two-year Treasury is currently trading.

So I think it's going to be very difficult for the 10-year yield to stay below 4% for any material period of time unless you believe there's going to be a significant flattening.

And we don't.

We think the curve's going to stay relatively steep around 60 basis points or so.

I think at the moment, they're probably still leaning towards potentially one more cut this year.

If the inflation numbers are coming down, but we also have to understand that the unemployment rate did tick down from 4.4% to 4.3%.

Now, could that be seasonal?

Could that be an aberration?

Maybe we need to see a couple of more numbers, which is why I don't think the Fed's going to do anything in the first quarter of this year.

They're going to have to wait until the second quarter, maybe late second quarter.

So I think the way the Fed is likely to interpret this is that we have inflation that seems to be stabilizing.

That's good news.

A labor market that also seems to be stabilizing, but we need a little bit more confidence in that.

You brought this point up earlier.

What about wages, right?

So I think the big complaint out there, and I did a podcast on this, which was to make a $20 hamburger affordable again.

And my point was that the price of that hamburger is not likely coming down.