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FOMC Minutes Show "Almost All" Fed Members See More Rate-Hikes In 2023, See "Mild Recession" In H2
Since the last FOMC meeting on June 14th - when The Fed 'paused' its hiking cycle (but pressed its view, via The Dots, that the cycle has at least 2 more hikes in it) - gold and bond (prices) are down 1-2% with the dollar basically flat. Stocks have rallied notably, but crypto has been the big winner... chart Which is 'odd' given that the market's expectations for Fed actions has shifted significantly more hawkish - despite the 'pause'. chart Another view of that is the upward shift in the Fed Funds curve expectations since the last FOMC meeting... chart So ahead of The Minutes, all eyes are on any confirmation ... (full story)
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post at 2:01pm: FED MINUTES: THOSE FAVORING AN INCREASE NOTED VERY TIGHT LABOR MARKET, STRONGER-THAN-ANTICIPATED ECONOMIC MOMENTUM, LITTLE EVIDENCE OF INFLATION BEING ON A PATH TO RETURN TO 2% TARGET OVER TIME. post at 2:02pm: FED MINUTES: ALMOST ALL PARTICIPANTS STATED THAT UPSIDE RISKS TO INFLATION OUTLOOK OR POSSIBILITY INFLATION EXPECTATIONS MIGHT BECOME UNANCHORED REMAINED KEY TO POLICY OUTLOOK.
The manager turned first to a review of developments in financial markets. Policy-sensitive rates increased over the intermeeting period, reflecting indications of continued resilience in the economy, persistently elevated core inflation, and reduced downside tail risks following the resolution of the debt limit. The shift in policy expectations contributed significantly to higher Treasury yields. The increase in nominal yields primarily reflected higher real rates rather than inflation compensation. Broad equity prices rose, al though the outperformance was concentrated in a handful of companies with a large market capitalization. Cyclical sectors fared better than sectors that tend to appreciate in a downturn, suggesting some reduced investor concern about downside risks to growth. Investor sentiment about the banking sector improved as perceived tail risks regarding regional banks appeared to have receded. Equity prices for regional banks rose over the intermeeting period but were still well below early March levels. Financial conditions indexes were roughly unchanged, as higher rates and a stronger dollar were offset by higher equity prices and narrower credit spreads. The vast majority of respondents to the Open Market Desk's Surveys of Primary Dealers and Market Participants expected no rate change at this meeting. While the median path from the surveys pointed to no rate changes through early 2024, there was significant dispersion across respondents, and respondents saw a clear probability of additional tightening at coming meetings. Respondents' average probability distribution for the level of the peak policy rate shifted higher since the May meeting and respondents on average assigned about 60 percent probability to the peak being above the current target range. The market-implied path for the policy rate continued to show some decline this year but less so than it had in recent months. Measures of uncertainty about the p post at 2:00pm: *DJ FOMC Minutes: 'Some' Officials Favored 25 Basis Point Increase At June Meeting post at 2:00pm: FOMC Minutes: 'Almost All' Officials Noted in SEP That Additional Rate Increases Would Be Appropriate in 2023 post at 2:00pm: FOMC Minutes: Core Inflation Had Not Show Sustained Easing Since Beginning of Year post at 2:01pm: FOMC Minutes: Staff Still See Mild Recession Later This Year, Followed By Moderately Paced Recovery FOMC Minutes: Staff Saw Possibility of Avoiding Downturn Almost As Likely As Mild Recession Baseline
Today at 2:00pm the Fed will release the Minutes to the June 14 "skip the rate hike... just don't call it a pause" FOMC decision. As newsquawk writes in its preview, the minutes ...
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post at 4:07pm: FED’S WILLIAMS: I’M NOT CONTENT WITH WHERE INFLATION IS RIGHT NOW post at 4:08pm: FED'S WILLIAMS: I AM SEEING PROGRESS ON INFLATION BUT PRICE PRESSURES ARE STILL TOO HIGH. post at 4:09pm: FED'S WILLIAMS: WE'RE SEEING SIGNS THAT SHELTER INFLATION IS IMPROVING. post at 4:11pm: WILLIAMS: ‘A BIT OF A SURPRISE” TO SEE RESILIENCE OF HOUSING MARKET post at 4:12pm: FED'S WILLIAMS: THE HOUSING MARKET NOT SUGGESTING RAMPANT RENT INFLATION.
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- Posted: Jul 5, 2023 2:20pm
- Submitted by:Category: Fundamental AnalysisComments: 0 / Views: 8,741
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