When I first saw the Fed’s SEP on Wednesday afternoon, I was quite surprised, even shocked, at the 50bps drop for the federal funds rate forecast at the end of 2024. After all, the core PCE projection had only dipped by 0.2 to 2.4%, and the unemployment rate...
Since the 9% peak in CPI last June, we have witnessed one of the fastest disinflations in modern history. What makes this collapse even more notable, however, is that it has occurred while the unemployment rate held below 4% and GDP growth ran well above trend. In...
As the rate market churns, I thought it might be useful to discuss the outlook for one of my favorite option structures: the Fed put. It's been just about two years since I walked away from a longstanding love affair with risk parity. Sadly, the supply-side-driven...
As a general rule, I endeavor to steer away from “normative” analysis in these commentaries. I do not believe that my thoughts on what should happen in markets or policymaking or politics or geopolitics matter much. Instead, I strive to give clients my best projection...
Today I’m going to continue focusing on the Fed balance sheet, picking up where I left off on Sept. 19 in my last note, entitled “Are we still jacked up on the stock of QE?” In doing so I want to take everyone back to the end of 2019. At that time, the fed funds...
Before embarking on today’s exciting topic, I want to highlight two upcoming events in October. First, on October 2nd, I will be hosting my good friend David Rosenberg for another macro chat/debate in NYC. Last autumn, we had a quite spirited discussion on the risk of...
At the beginning of this year, most professional forecasters were predicting that the US economy would currently be in a recession. And with SOFR futures pricing in 50bps of rate cuts between June and December back at that time, the markets surely agreed. Given that...
In a 2007 CNBC interview, anchor Maria Bartiromo asked then-retired Fed Chair Alan Greenspan to explain the concept of "Fedspeak." His answer was as follows: "It's a… a language of purposeful obfuscation to avoid certain questions coming up, which you know you can't...
I don't typically like using charts in my market commentaries. I have always been more of a words over pictures kinda guy. But occasionally I break with standard protocol, especially when something worthy catches my eye. And to be sure, the following two charts meet...
I was thinking of titling today’s missive “It just ain’t that bad – part 3,” but then I thought that a little too banal. The bottom line, though, is that this past week’s inflation data certainly adds to a theme of overall positivity. A 3.6% unemployment rate combined...
I was thinking of titling today’s missive “It just ain’t that bad – part 3,” but then I thought that a little too banal. The bottom line, though, is that this past week’s inflation data certainly adds to a theme of overall positivity. A 3.6% unemployment rate combined with a 3% CPI inflation rate has […]
