Fed Moves Liftoff Up a Year, Makes Technical Rate Adjustments

“If I turn out to be particularly clear, you’ve probably misunderstood what I’ve said.”
-Alan Greenspan

Breaking rocks in the hot sun, you fought the fed and the fed won! Hopefully, you didn’t short bonds this week because if you did, you’re probably a bit testy and upset. It’s ok, we get it. There was a lot of reasons to suspect Jay Powell might bungle up and deny the evidence of inflationary conditions that is mounting daily, but instead he seems to have seized control of the narrative to the surprise of vocal critics. Don’t underestimate the guy holding the biggest stick!

The reflation trade and commodities got hit particularly hard in the wake of comments. Not only did markets buy Powell’s transitory narrative but rates went down. Powell specifically said that this is the beginning of “Talking about talking about tapering” without actually answering the question of when he would taper. He suggested we retire the term, but we like it so much! In the end, the Fed appears to be letting the data drive its decision making and it doesn’t have enough data so it successfully bought some time.

Don’t get us wrong we do think inflationary pressure is coming, but on a different timeline and for different reasons than most. We like to pay attention to ge...

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