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Fed Watch

Fed Watch

Markets were down for the eighth consecutive week as they continued to process a plethora of risks. One of the primary risks that investors are focusing on is the Federal Reserve’s resolve in tackling inflation. Earlier this week Chairman Powell gave some more clarity. While...

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CPI Comes In Above Expectations, Powell Confirmed

As inflation remains near its fastest rate in nearly 40 years, the Federal Reserve continues to signal its hawkish stance for 2022. Inflation began to accelerate last spring, but Fed policymakers initially thought price gains would quickly fade. Though it became clear in the fall that fast inflation was proving...

Fed Raises Target Rate by 50 bps, Powell Rules Out 75 bps Hikes for Now

The Fed had its monthly meeting on May 3rd and May 4th.  The market was widely expecting a 50-bps hike despite some murmurs from the hawkish flank. Powell also telegraphed markets could likely expect two more 50-bps hikes. That is what the market got and despite fears of hawkish rhetoric...

  • Fed Watch
April 29

PCE Comes in With Mixed Results, Brainerd Nominated to Vice Chair, GDP Miss Likely Doesn’t Change Fed Calculus

The Fed’s preferred measure of inflation, the Personal Consumption Expenditure Index (PCE), was reported Friday morning. The index went up 6.6% which was the most significant increase since 1981. However, when looking under the hood in the numbers there was some promising evidence that at least some problematic components of...

  • Fed Watch
April 22

Powell Takes Hawkish Tone at IMF Appearance, Fed Futures Expectations Rise

Chairman Powell appeared before the IMF, and he echoed a more hawkish tone that has been evolving in Federal Reserve commentary over the past weeks. He said he believed it was appropriate to move a little more quickly than his previous comments. Let’s remember that as recently as December the...

  • Fed Watch
April 14

Inflation Prints Put Short-Term Pressure On Fed, Atlanta Fed Study Suggests 25% of Labor Decline From Substance Abuse

There were more hot inflation numbers this week. CPI came in at 8.5% which was the highest pace in over four decades. PPI was even higher at 11.2%. This was the seventh consecutive increase in inflation. The news of course was more complex than just the headline number. White-hot numbers...

  • Fed Watch
April 8

Fed Begins Preparing Market For Inflation Fighting Focus, Minutes Give Clarity on Quantitative Tightening

This was the week of the crying dove. Lael Brainerd could be considered one of the leaders of the dovish camp in the Federal Reserve. She attended a virtual conference hosted by the Minneapolis Federal Reserve where she made it clear she views fighting inflation as a task of “paramount...

  • Fed Watch
April 1

Fed Releases Paper Dismissing Curve Inversion, Hawkish Rhetoric Continues Building as 50 bps Hike Gets Priced In

The yield curve inversion has spooked investors this week. However, Fed economists Eric Engstrom and Steven Sharpe took the position that investors should not spook so easily because of the yield curve alone. In their paper _“Don’t Fear The Yield Curve, Reprise,_” the two economists argued that the correlation between...

  • Fed Watch
March 18

FOMC Lifts Fed Funds By 25 bps, Hawkish Talk From Members Grow, Dot Plot Suggest Six More Hikes This Year

The Fed conducted its long-awaited lift-off and the market appeared largely encouraged by the choreographed nature of it all. Shorty after lift-off, there was a few hawkish comments from Federal Open Market Committee (FOMC) members that we’ll discuss below, but overall the reaction from the market has been positive and...

  • Fed Watch
March 11

Federal Reserve Liftoff of 25 bps Likely Next Week, Tapering Has Ended

The Fed got no favors this week as the war in Ukraine continued to rage with ominous implications for inflation. Next week’s March meeting will mark the end of the post-pandemic monetary era and the beginning of the biggest challenge for the world’s most powerful central bank Paul Volcker was...

  • Fed Watch
March 4

Powell Appears Before Congress, Beige Book Released, Fed Nominations Still Frozen

US Federal Reserve Chairman Jay Powell testified by the House Financial Services Committee and the Senate Banking Committee this week. Powell performed to the market’s liking and provided great stability for the upcoming meeting, all but assuring a 25 bps hike will occur in the coming weeks. He mentioned a...