Gary Siegel

Director, Wells Fargo Securities

The U.S. economy is growing slower than it has in the past couple of years, and conditions may get worse in the next few quarters, according to Federal Reserve Bank of St. Louis President James Bullard.

The Federal Reserve took center stage again Friday, with two presidents explaining why they dissented at the latest meeting and Vice Chair Richard Clarida terming it “healthy” debate.

Observers said the opponents of further rate cuts on the Fed tend to be the non-voters.

The market got what it expected and can now shift attention to the week's remaining deals after Fed policy makers cut interest rates by a quarter point.

The FOMC voted to cut the target range 25 basis points to 1.75% to 2% as “uncertainties” offset prospects for “sustained expansion of economic activity, strong labor market conditions, and inflation near the Committee's symmetric 2 percent objective.”

A rate cut alone probably won't avert a recession. A rate cut combined with a ceasefire in the trade war might, according to one market strategist.

Middle East unrest, oil price volatility and a Fed policy meeting all combine to weigh on this week’s $10B new-issue calendar.

The Federal Open Market Committee meeting featuring the release of a new Summary of Economic Projections should give the market a better clue as to whether the expected rate cut is part of a mid-cycle adjustment or the second step in an easing cycle.

Retail sales showed consumers continue to propel the economy, though the number excluding autos was weaker than forecast.

With a tweet, President Trump has reopened the debate about negative interest rates.

Thomas Garretson, fixed income portfolio strategist at RBC Wealth Management, and Craig Bishop, lead strategist, U.S. fixed income strategies at RBC Wealth Management, discuss the upcoming Fed meeting, rate cuts, the divide among participants, the inverted yield curve, Fed independence, and recession. Gary Siegel hosts.

The producer price index grew 0.1% in August, while the core rate — which excludes food and energy — rose 0.3% in the month, the Labor Department reported Wednesday.

GDP will grow 0.9% in the fourth quarter and 1.2% in the first quarter of 2020 before rebounding, economists at BNP Paribas predict.

The Federal Reserve’s pre-meeting blackout period started, and although we won’t hear from Fed officials this week, several economic indicators are slated, including inflation data on Wednesday and Thursday and reads of the consumer sector on Friday.

The employment report suggests the economy is slowing, though not to the point of recession.

The Federal Reserve Bank of New York sees a nearly 38% chance of recession by August 2020, up from 31.5% in the July reading.

With the markets expecting rate cuts to continue, the Federal Reserve won't commit to further action before meeting later this month.

Consumers are still fueling economic expansion, with personal consumption gaining 0.6% in July after a 0.3% rise in June.

Three Federal Reserve Bank presidents said they would cautiously consider supporting a rate cut.