Mid-Week Thoughts
Neutral
No surprise today, no hike, as expected.
Some key headlines:
*POWELL: GIVEN HOW FAR WE’VE COME, FOMC IS PROCEEDING CAREFULLY
*POWELL: FULL EFFECTS OF TIGHTENING YET TO BE FELT
*POWELL: ECONOMIC ACTIVITY EXPANDING AT STRONG PACE
*POWELL: PROCESS OF GETTING INFLATION TO 2% HAS LONG WAY TO GO
*POWELL: EVIDENCE OF ABOVE-POTENTIAL GDP COULD WARRANT HIKE
*POWELL: ATTENTIVE TO INCREASE IN LONGER-TERM YIELDS
*POWELL: FINANCIAL CONDITIONS HAVE TIGHTENED SIGNIFICANTLY
*POWELL: NOT CONFIDENT WE'VE REACHED STANCE FOR 2% INFLATION
Not much to comment on with regards to the FOMC - still a hawkish bias, with small hints that another hike is on the table. Acknowledgement of tighter financial conditions taken as a more dovish comment as indicates that there’s less need for the Fed to hike and they can continue to let markets do the job for them (as I mentioned in the post below…) “the recent tightening in FCI since August has been the equivalent of ~75bp of rate hikes”
2% target still far away, my thesis of getting well below target still far too, lol. Markets will become more focused on data points before the next meeting as the Fed takes it meeting to meeting. Overall, a pretty mixed presser.
There’s 40 trading days left in 2023. And being candid, I think the pain trade for year-end remains down - but as I have been in Q4, with a very open mind. It’s 11pm here so let’s dig in…