Episodes
Why the Fed Watches the Budget Deficit
On this episode of The Macro Memo, Lucas and Luna examine a paradox: inflation is cooling, the Fed is on hold, and yet the yield curve is steepening as the ten-year Treasury yield climbs. The culprit, they argue, is the exploding U.S. budget deficit, which surged to its highest level since March 2021 in July. With nominal GDP at $32.5 trillion and the government borrowing heavily, bond investors are demanding a risk premium. Lucas explains how deficit-driven supply is pushing long-term yields…
Why the Fed Ignores the Budget Deficit's Record Surge
On this episode of The Macro Memo, Lucas and Luna dig into the July budget deficit — the largest since March 2021 — and ask a simple question: why doesn't the Federal Reserve seem to care? They explain how deficit spending doesn't automatically fuel inflation when the economy is operating below capacity, and how the Fed's focus on inflation expectations, not fiscal numbers, shapes its response. With the 10-year breakeven inflation rate ticking up to 2.27 percent and the Fed holding rates steady…
Why the July Jobs Report Signals a Fed Shift
In this episode of The Macro Memo, Lucas and Luna dig into the July jobs report and why it's the Fed's toughest puzzle yet. Unemployment fell to 4.1 percent while payrolls shrank by 23,000 — a split that has the Fed on hold. They unpack what the household survey is telling us, why job openings have dropped to 7.36 million, and how the Fed's focus on the labor market, not inflation, is shaping the next move. Plus, they look at the bond market's signal: the 10-year Treasury yield at 4.70 percent…
Why Unemployment Fell While Payrolls Shrank
In this episode of The Macro Memo, Lucas and Luna dig into a quiet anomaly in the July jobs report: the unemployment rate ticked down to 4.1 percent even as nonfarm payrolls posted a net decline. They explore how the household survey and the establishment survey can diverge, what falling job openings (down to 7.36 million) and a slight uptick in initial claims tell us about labor market slack, and why the Federal Reserve is paying more attention to the unemployment rate than to payrolls right…
The Hidden Cost of Cheap Lettuce
Lettuce prices just crashed to record lows, and that's not the good-news story it sounds like. In this episode, Lucas and Luna unpack the economics of food deflation: why a cyclospora scare sent demand off a cliff, what the plunge in wholesale produce prices reveals about the fragility of the fresh-food supply chain, and why cheap lettuce might actually be a warning sign for inflation. They connect the dots between the CPI's cooling headline number and the sticky reality in grocery aisles, and…
Why Lettuce Prices Are Crashing While Inflation Sticks
In this episode of The Macro Memo, Lucas and Luna dig into a striking anomaly in this morning's CPI report: lettuce prices plunged at a record pace, dragged down by cyclospora fears, even as the overall inflation rate held at 3.4 percent. They unpack how a single health scare can distort the inflation numbers the Federal Reserve watches, and why core measures that strip out food and energy still run hot. With the ten-year breakeven rate easing and jobless claims ticking up, the hosts debate…
Why the July Jobs Report Shook the Fed
The July jobs report showed the U.S. economy unexpectedly lost 23,000 jobs, the first negative print in years. Lucas and Luna dig into what this means for the Fed's next move: a potential rate cut in September, a repricing of the yield curve, and the puzzle of falling inflation alongside a cooling labor market. They unpack the numbers—unemployment at 4.1%, core PCE still elevated, and the ten-year breakeven inflation rate creeping up—and discuss why the Fed is stuck between two uncomfortable…
Why July Jobs Report Signals a Fed Shift
In this episode of The Macro Memo, Lucas and Luna dissect the surprising July jobs report, which showed a loss of 23,000 jobs, the first negative print in years. They unpack what this means for the Fed's next move, especially with core PCE ticking up and GDP growth slowing to 1.5 percent. The hosts discuss the divergence between the household and establishment surveys, the drop in job openings, and why the labor market cooling might be exactly what the Fed needs to see before any rate cut. They…
Why the July Jobs Report Is the Fed's Toughest Puzzle Yet
The July jobs report showed a surprise loss of 23,000 jobs — the first outright decline in years. Lucas and Luna dig into what this actually means for the Federal Reserve's rate path. They unpack the divergence between the payroll number and the unemployment rate, which fell to 4.1 percent, and why the Fed is likely to look through the headline. With core PCE still running above target and the ten-year Treasury yield easing, the hosts explain why markets are pricing in a cut by September, and…
Why the July Jobs Report Is the Fed's Toughest Puzzle Yet
The July jobs report delivered a rare surprise: the US economy lost 23,000 jobs, even as the unemployment rate ticked down to 4.1 percent. Lucas and Luna unpack what this means for the Federal Reserve's policy path. They dig into the numbers—payrolls slipping to 158.9 million, job openings easing to 7.4 million, and wage growth holding steady at $37.60 an hour—and explain why this mixed picture is exactly what keeps the Fed on hold. They also explore how the bond market is reading the signals…
Why the Fed Watches the Jobs Report So Closely
When the July jobs report hit the wires on August 7, 2026, the headline number was a surprise: the U.S. economy lost 23,000 jobs, the first negative print in years. Lucas and Luna unpack what that actually means for the Federal Reserve's next move, digging into the details beneath the headline—from the drop in private payrolls to the steady unemployment rate at 4.1 percent. They explain why the Fed is likely to look through a single soft month, why the bond market is already pricing in a rate…
Why the Fed Is Watching Softer Job Openings
In this episode of The Macro Memo, Lucas and Luna unpack the latest JOLTS report showing job openings at 7.359 million in June, down from 7.537 million, and what that signals for the Federal Reserve. With the unemployment rate at 4.2 percent and the Fed funds rate holding steady at 3.63 percent, the hosts explore why a cooling labor market might not trigger immediate easing. They discuss the divergence between job openings and hires, the implications for wage growth and inflation, and how Fed…
How Warsh Navigates Fed Pressure as Inflation Cools
In this episode of The Macro Memo, Lucas and Luna unpack the pressure mounting on Fed Chair Kevin Warsh as inflation cools to multi-year lows while manufacturing surveys show price worries worse than the pandemic era. With the Fed on hold and the 10-year breakeven at 2.23 percent, they explore the tension between falling headline CPI and sticky core PCE, and what the ADP miss of just 44,000 private jobs means for the labor market. They also examine why bond markets are pricing lower inflation…
Why the Fed Watches Core PCE While CPI Cools
In this episode of The Macro Memo, Lucas and Luna dig into a quiet but crucial divergence in the inflation data: headline CPI and the PCE price index are cooling, but core PCE — the Fed's preferred gauge — actually ticked up in June. With the Fed on hold and the ten-year breakeven rate drifting down to 2.27 percent, the hosts ask what the central bank is really looking at. Lucas walks through the mechanics of why core PCE can rise while CPI falls, from rental weights to the way healthcare…
Why the Fed Is Stuck Between Falling Inflation and Manufacturing Angst
In this episode of The Macro Memo, Lucas and Luna dig into a strange moment for the Federal Reserve: inflation has cooled to its lowest in years, but a new manufacturing survey shows price worries 'worse than pandemic era.' They unpack the latest CPI and core PCE numbers, the 1.5 percent GDP print, and what a divided Fed means for rate policy heading into fall. Plus, they explore why job openings are up even as unemployment dips, and what the steep yield curve is signaling about growth…
Why the Fed Is Watching China's Factory Slump
On this episode of The Macro Memo, Lucas and Luna dig into the latest China factory activity data and what a surprise contraction in July means for global inflation and the Federal Reserve's next move. With US core inflation at 3.3% and the Fed holding steady, how much does a slowdown in China's manufacturing matter for US price pressures? The hosts break down the transmission channels—from export prices to commodity demand—and discuss why the Fed might be paying closer attention than you'd…
Why the Yield Curve Is Steepening While the Fed Holds Firm
On this episode of The Macro Memo, Lucas and Luna dig into a striking market signal: the ten-year Treasury yield has climbed to 4.74 percent while the two-year sits at 3.68, a steepening curve that usually suggests investors expect growth and inflation to pick up. But the Fed, led by Kevin Warsh, is holding rates steady at 3.63 percent, and core inflation is running at 3.3 percent. How do we square a steepening curve with a cautious Fed? The hosts walk through what the curve is really saying…
Why GDP Growth Slowed but Jobs Stay Strong
In this episode of The Macro Memo, Lucas and Luna unpack the strange divergence in the latest US economic data. Real GDP growth dropped to an annualized 1.5% in the second quarter, down from 2.1%, yet the unemployment rate fell to 4.2% and payrolls kept adding jobs. They explore possible explanations, including labor hoarding and productivity shifts, and discuss what this puzzle means for the Federal Reserve's policy path. With core inflation still running around 3.3%, the Fed holds steady at…
Bond Markets Expect Higher Inflation Despite Cooling CPI
The 10-year breakeven inflation rate has risen to 2.26%, even as the latest CPI reading fell to 332.6. What does the bond market see that consumer prices aren't capturing? In this episode, Lucas and Luna examine the growing disconnect between market-based inflation expectations and official inflation data. With the Fed firmly on hold and the labor market still tight—unemployment at 4.2% and jobless claims at 187,000—we explore whether the bond market is pricing in tariff-driven price pressure…
Why the Fed Is on Hold While Singapore Tightens
In a surprise move on July 27, Singapore's central bank tightened monetary policy, warning that rising oil prices could reignite inflation. But the Federal Reserve remains steadfast at 3.63%, even as the US economy shows real GDP growth of 2.1% annualized and unemployment at 4.2%. In this episode, Lucas and Luna break down why the Fed can afford to wait while other central banks act. They explore the strength of the US labor market—with jobless claims at 187,000—and cooling headline CPI, which…
How Kevin Warsh's Three Keywords Signal Fed Policy
Fed Governor Kevin Warsh has zeroed in on three specific phrases that market watchers use to decode the central bank's next move. On this episode of The Macro Memo, Lucas and Luna break down what 'patient,' 'data-dependent,' and 'balanced risks' really mean — and why Warsh's choice of words matters more than ever. With jobless claims at 187,000, GDP growth rebounding to 2.1%, and core PCE still sticky at 130.1, the Fed is navigating a tricky landscape. Lucas explains how each phrase maps to…
How Jobless Claims Hit 187k and Yields Still Fell
Initial jobless claims dropped to 187,000, the lowest in decades, yet 10-year Treasury yields fell 1.2% over the same week. Lucas and Luna dig into the disconnect between a red-hot labor market and a bond market betting on slower growth. They examine the latest breakeven inflation rate, which slipped to 2.21%, and ask whether the Fed's hold pattern makes sense when real-time data shows the economy accelerating. Trade tensions, Singapore's surprise tightening, and the lagged effects of past rate…
Why Core PCE Is Sticky While CPI Cools
Headline CPI fell in June, but the Fed's preferred inflation gauge—the core PCE index—actually rose to 130.1 from 129.67, an annualized pace near 4 percent. Lucas and Luna unpack the growing divergence between the two measures, explain why housing and health-insurance costs are keeping services inflation stubborn, and examine why the Fed is holding rates at 3.63 percent despite bond-market signals that future inflation will ease. They also connect the dots to the ultra-low 187,000 jobless…
The Inflation Divergence the Fed Can't Ignore
Episode 140 of The Macro Memo explores the puzzling divergence between the Consumer Price Index, which fell in June, and the Fed's preferred PCE measure, which is ticking up. Lucas and Luna break down the components driving the gap—healthcare prices, financial services, and energy—and discuss why the Fed pays more attention to PCE. With the unemployment rate at 4.2% and jobless claims at a stunning 187,000, the labor market remains tight. Yet the Fed has held rates steady at 3.63% since June.…
Why Bond Markets Are Ignoring Tariff Inflation Threats
In this episode of The Macro Memo, Lucas and Luna explore a surprising disconnect: the 10-year breakeven inflation rate has fallen to 2.26%, its lowest in weeks, even as import prices from China hit levels not seen since 2008. They unpack why bond markets remain calm despite tariff headlines, what the Fed's steady hand at 3.63% signals, and how the Singapore central bank's surprise tightening contrasts with the Fed's patience. Plus, the hosts examine the latest PCE and CPI data, and what…
What the Steep Yield Curve Is Telling the Fed
The yield curve is no longer inverted — it's steep, with the 10-year Treasury at 4.68% and short-term rates near 3.8%. Lucas and Luna unpack what this steepening means for the Fed's next move. With the unemployment rate dropping to 4.2% and GDP growth rebounding to 2.1%, the economy looks strong. But the bond market is demanding a higher term premium, possibly due to fiscal concerns. The hosts discuss how Fed watchers are interpreting Kevin Warsh's recent language and why the central bank may…
Why the Lowest Jobless Claims in Years Aren't Worrying the Fed
Initial jobless claims just dropped to 187,000, the lowest in years. Normally, that signals an overheating economy. But the Fed isn't flinching. In this episode, we unpack the paradox: why a tightening labor market coexists with cooling inflation. We examine the latest data—including a dip in core CPI and a steady Fed funds rate at 3.63%—and discuss how Fed watchers are parsing Kevin Warsh's recent remarks. Warsh has zeroed in on three key phrases that hint at the central bank's patience…
The GDP Rebound That Has the Fed Thinking Twice
Episode 136 of The Macro Memo. Real GDP just surged to 2.1 percent annualised, up from 0.5 percent last quarter. Lucas and Luna unpack what drove the rebound — consumer spending, a tight labor market, and a World Cup boost — and why the Fed is holding steady at 3.63 percent. They also examine the bond market's skepticism, with the 10-year yield climbing to 4.68 percent, and the risks that could upend the Goldilocks scenario: surging Chinese import prices, delayed generic drug tariffs, and…
Why the Fed Holds Steady as Jobs Boom and Inflation Cools
Lucas and Luna dig into the latest labor market data: initial jobless claims dropped to 187,000, unemployment fell to 4.2 percent, and the Fed is keeping rates at 3.63 percent. With falling CPI but sticky core PCE and a surprise rise in import prices from China, they explore why the central bank isn't cutting despite cooler inflation. They also unpack the Fed's communication strategy through Kevin Warsh's three key phrases and the looming tariff risks on generic drugs. #FederalReserve #JobsData…
How Job Openings Outpace Hires and Reshape Fed Policy
The U.S. labor market is sending a confusing signal: job openings are rising again, but hiring isn't keeping pace. In this episode of The Macro Memo, Lucas and Luna dig into the latest JOLTS data from May, which showed openings climbing to 7.59 million while hires and quits remained flat. They explore what this 'hiring chill' means for wage growth, worker bargaining power, and the Federal Reserve's next move. With the unemployment rate ticking down to 4.2 percent and initial jobless claims…
How Generic Drug Tariffs Could Reshape Inflation
In this episode of The Macro Memo, Lucas and Luna dive into the Trump administration's latest proposal to impose tariffs on generic drugs starting in 2028, with a two-year delay. They explore the potential impact on pharmaceutical supply chains, consumer prices, and inflation. With core PCE still sticky at 2.6% and import prices from China at their highest since 2008, the hosts question whether this policy could lead to a spike in healthcare costs while the Fed navigates a delicate rate-cutting…
How World Cup Spending Skewed US Inflation Data
Lucas and Luna dig into a fresh Fed report showing that World Cup spending gave bars and restaurants a temporary boost, but consumer fundamentals are flashing warning signs. They discuss how the surge distorted the June retail and services data, what it means for core inflation readings, and why the Fed is wary of reading too much into the noise. With import prices from China at a 17-year high and wholesale prices unexpectedly declining, the hosts connect the dots on what the real trend looks…
Why the Housing Market Is Mispricing Mortgage Rates
With the 10-year Treasury yield hovering near 4.66% and home prices still elevated, Lucas and Luna unpack a surprising disconnect: mortgage rates are lagging the bond market, and homebuilders are using buy-downs to mask affordability gaps. They walk through the data — including the latest CPI print at 332.6 and the Fed's IOER at 3.65% — to explain why the housing market may be mispricing risk. A focused look at spreads, builder incentives, and what it means for the broader inflation picture. No…
How Generic Drug Tariffs Could Reshape Inflation
Lucas and Luna dissect the Trump administration's plan to impose tariffs on generic drugs starting in 2028, with a two-year delay to encourage domestic production. They explore the potential impact on drug prices, the broader inflation picture, and the challenges of onshoring pharmaceutical manufacturing. Drawing on recent data including a surprise uptick in import prices and declining CPI, they ask whether the policy is a long-term bet against inflation or a risk to consumer health costs. A…
How Tariffs on Generic Drugs Could Reshape Inflation
In this episode of The Macro Memo, Lucas and Luna examine the potential economic fallout of proposed tariffs on generic drugs, set to begin in 2028. They discuss how this policy could impact drug prices, inflation, and the broader healthcare sector. Using recent data on import prices from China, which hit their highest level since 2008, and the current unemployment rate of 4.2 percent, they explore the trade-offs between boosting domestic production and higher consumer costs. The hosts also…
Why the Fed Is Tracking Chinese Import Prices Again
China's export prices are surging for the first time in years, with import costs from China hitting their highest since 2008. In this episode, Lucas and Luna explore why that matters for US inflation and the Federal Reserve's next move. They break down the data: core CPI is finally edging down, but if Chinese goods become more expensive, that disinflationary tailwind reverses. They also connect the dots to the recent surprise jump in the overall import price index and what it means for the…
Why Chinese Import Prices Are Rising Again
Import prices posted a surprise gain in June, with costs of goods from China hitting their highest level since 2008. Lucas and Luna drill into the specific drivers behind this reversal—rising energy costs, a weaker yuan, and shifting trade flows—and what it means for the broader disinflation narrative. They discuss why the Fed's preferred PCE measures may not fully capture this pressure, how corporate margins are absorbing the shock, and whether this marks a turning point in the global…
Core Inflation Is Sticky But Consumers Are Still Spending
In this episode of The Macro Memo, Lucas and Luna dig into the latest CPI and PCE data to understand why core inflation remains stubbornly above the Fed's target even as headline CPI ticks down. They examine the divergence between goods and services inflation, the role of housing costs, and what the break-even inflation rate signals about market expectations. With the Fed holding rates steady at 3.63%, they discuss whether the economy can sustain consumer spending without a rebound in wage…
Why Wage Growth Hasnt Boosted Consumer Spending as Expected
In this episode of The Macro Memo, Lucas and Luna unpack a puzzle at the heart of the current economy: average hourly earnings are up to $37.60, yet consumer spending is showing cracks. They explore a new Fed paper that suggests higher wages are being absorbed by debt service costs, with credit card balances rising and a World Cup boost for bars fading fast. The hosts drill into why the wage-spending link may be broken, what import price data from China reveals about margins, and whether the…
How the World Cup Distorted US Consumer Spending Data
In this episode of The Macro Memo, Lucas and Luna dig into a surprising detail from the Fed's latest Beige Book: the World Cup gave bars and restaurants a significant boost, even as broader consumer spending showed warning signs. They explore how a single mega-event can temporarily distort economic data, masking underlying trends like rising credit card usage and a shift toward services over goods. Using specific data points including the 0.3 percent drop in wholesale prices and the latest CPI…
Why the Yield Curve Is Un-Inverting and What It Means
The yield curve has been inverted for over two years, but in recent weeks it has steepened sharply, with the 10-year Treasury yield at 4.54 percent and the 2-year at 3.71 percent, a spread of 83 basis points. Lucas and Luna dig into why this matters: historically, an un-inverting curve has been a recession omen, but today the context is different. They explore how the Fed's rate cuts, sticky inflation expectations, and a still-strong labor market are combining to reshape the curve. They also…
Why Import Prices Just Surprised the Market
Episode 122 of The Macro Memo with Fexingo dives into the surprise rise in import prices reported on July 17, 2026. Hosts Lucas and Luna unpack why costs of goods from China hit their highest level since 2008, even as wholesale prices fell and core CPI cooled. They explore how this inflation splinter — between what we pay at the dock and what we see on shelves — is confusing the Fed's rate path, and why the dollar's strength might not be enough to offset tariff hangovers and supply-chain…
Why Import Prices Just Surprised the Market
On today's Macro Memo, Lucas and Luna dig into the surprising import price data released on July 17 — the first gain in months, with costs from China hitting their highest level since 2008. They unpack what this means for the disinflation narrative, how it connects to China's slowest quarterly growth since 2022, and why the Fed might be paying close attention. Plus, a look at the conflicting signals: falling wholesale prices versus rising import costs, and what that says about the path of core…
Why Consumers Are Tapping Credit Cards Again
Consumer spending remains resilient, but there's a shift happening beneath the surface: credit card balances are rising as savings dwindle. Lucas and Luna break down the latest Federal Reserve data on revolving credit, the disconnect between strong retail sales and deteriorating household balance sheets, and why this trend has the Fed paying close attention. They explore how the World Cup gave bars and restaurants a temporary boost, but the broader picture shows consumers leaning on debt to…
Why the Fed Is Cutting Despite a Strong Jobs Market
Lucas and Luna break down the Federal Reserve's decision to cut interest rates even as the unemployment rate dropped to 4.2% and nonfarm payrolls hit a record high. They explore the puzzling disconnect between strong headline jobs numbers and the Fed's focus on falling wholesale prices, core CPI at 3.5%, and a ten-year breakeven inflation rate that's slipped to 2.23%. The hosts dig into recent FOMC commentary and market pricing to explain why the central bank is prioritizing inflation…
Why the Fed Is Watching Wholesale Prices More Than CPI
In this episode of The Macro Memo, Lucas and Luna break down the surprise 0.3 percent drop in wholesale prices reported on July 15, 2026, and what it means for the Fed's next move. With core inflation still sticky and the unemployment rate dipping to 4.2 percent, they explore why the Producer Price Index might be a more reliable signal than CPI right now. They also discuss how falling energy costs—especially gasoline—are reshaping the inflation outlook, and whether the Fed can afford to cut…
Why Wholesale Prices Just Dropped Unexpectedly
In this episode of The Macro Memo, Lucas and Luna dig into the surprising 0.3% decline in wholesale prices for June 2026, driven largely by a sharp drop in gasoline costs. With core CPI stubbornly high and consumer inflation coming in at 3.5%, they explore what the PPI data signals about the broader disinflation trend, the health of corporate margins, and the Fed's next move. Lucas ties the wholesale price decline to the pass-through lag from energy to consumer goods, while Luna questions…
How China Export Prices Are Reshaping Global Inflation
Episode 116 of The Macro Memo examines how weak Chinese producer prices are exporting disinflation to the rest of the world. Lucas and Luna discuss the latest CPI print of 3.5% year-over-year for June, the impact of China's producer price index at a near four-year high, and what this means for the Fed's policy path. They explore why falling import prices are helping to cool core goods inflation even as services inflation remains sticky. The conversation also touches on the divergence between…
How Falling Inflation Is Reshaping Consumer Behavior
In this episode of The Macro Memo, Lucas and Luna examine how the latest CPI data—showing a 3.5% annual increase, below expectations—is influencing consumer behavior and Federal Reserve policy. They discuss the concept of 'funflation' and why staying home is no longer cheaper, drawing on recent headlines and economic indicators. The conversation also touches on the 10-year breakeven inflation rate at 2.26% and what it signals about market expectations. Lucas and Luna explore the implications…
Why the Labor Force Drop Is a Structural Crisis
Lucas and Luna dig into the latest labor force participation rate data, which fell to its lowest level in 50 years outside the Covid era. They explore why workers are leaving — from long Covid effects to early retirements and skill mismatches — and what it means for Fed policy, wage growth, and the economy's long-run capacity. With the unemployment rate ticking down to 4.2 percent but job openings rising, the picture is more complex than a simple 'tight labor market' story. They also discuss…
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