Dissent and Disappointment

I’ll start today where I ended Tuesday’s note: “... we should seriously consider the possibility that this meeting could have more room for dissent and disappointment than is readily apparent.” Well, there is no doubt that this FOMC meeting brought with it both...

The politics behind tomorrow’s FOMC decision

Imagine for a moment you are a Federal Reserve Board Governor or a Federal Reserve Bank President. Further imagine that after agreeing with your colleagues on the need for an inflation-targeting regime change in August, it’s now time to put the plan into action this...

The death of the death of the USD

Try to find a mainstream financial news article, or a sell-side research piece, which outlines a bullish case for the USD. It ain’t easy! I browsed through my inbox, and online, going back to March, but I came up empty-handed. I suppose if there was one, its bullish...

The FOMC kills the NAIRU but commits to keep forecasting its value

There has been an avalanche of Fed speak to parse through since Jay formally announced the adoption of a new framework for monetary policy during the annual Jackson Hole conference last Thursday. Current FOMC members Rich Clarida and Lael Brainard have weighed in with...

Risk-free real rates, risky real rates, spoos & gold

As promised last week, I am going to share some rather wonky real-rate-infused thoughts on the outlook for spoos and gold. Today’s piece will draw quite heavily on a commentary I penned back in 2013 entitled Risk-free real rates and risky real rates. If you have not...

Nikki the waitress and real rates

During the month of July I decided to cruise through Colorado, Utah, Montana, Wyoming, and South Dakota in my slightly pimped-out/jacked-up Jeep Wrangler. I stayed in small towns, visited old friends, met new friends, hung out with my kids, and enjoyed the great...

Signs of Synchrony on Wall Street and Main Street

Even with all the noise in the economic data over the last four months, it is hard not to be impressed with the US payroll numbers. After losing 20m jobs in March, the US economy has regained over 9m jobs in the last three months. And after peaking at ~15% in March,...

The REAL story

The real story in today’s market is NOT about surging Fed-induced hyperinflation risks or the dollar’s impending transformation into a Hungarian Pengő. Rather, it’s about the collapse in long-term REAL interest rates to record lows. In order to support this thesis,...

Some quick thoughts on Powell’s presser

Aside from the obviously dovish tone on both the policy and economic outlooks, I found these points worth highlighting: There was no announced formal framework change, sadly. However, during his response to the last question from Yahoo Finance, he stated that the FOMC...

Why wait on a framework change?

Back on January 16, 2020, when 2yr notes were yielding north of 1.50% and no one had ever heard of a coronavirus, I penned the following excerpt in a note entitled The pulchritudinous skew in 2s: Looking at either 2-year yields or each of the individual red ED...
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