ECB makes dovish turn, risk rallies… a harbinger to when that day arrives for Fed. Removing tactical OW of regional banks.

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We discuss: It’s been a data heavy week, but the big news is ECB yesterday and it’s dovish impact on bond markets.

Please click below to view today’s Macro Minute (Duration: 5:36).

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The Federal Reserve FOMC will announce its September interest rate decision on 9/20 at 2:00pm ET. The August PPI, released yesterday, is last key "hard data" point and futures markets have now priced in a mere 2% probability of a hike in September. And the odds of a November hike have tanked recently to 33% from 48% a few weeks ago. And as we have written multiple times over the past few months, we believe these odds eventually fall to 0% and that the July hike is the last hike of the cycle. To me, this is the most important development in the next few months and also the cornerstone for why we see equities rallying into year-end.

Yesterday, the ECB raised interest rates by +25bp, its 10th consecutive hike, to 4% and the ECB President suggested t...
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