FED may deliver at least two more rate hikes in Sep and Nov. Market is debating whether 75bp or 50bp in Sep. Peak Fed Fund Rate might be limited to 3.75-3.80%. Some chances that US 10Yr might remain below 3.6%. Need to see whether CPI has already peaked at 9.00%, proving our earlier peak-CPI estimate of 10.9% to be wrong? The US 2Yr also has Resistance at 3.50% and there are some chances that the current Curve-inversion might give way to some flattening, or maybe even steepening, which would be welcomed by the markets, as it might signal a slightly dovish FED, especially if CPI is seen to have peaked at 9%.
POWELL HAS A TOUGH JOB
To be fair, Jerome Powell possibly has one of the toughest tenures as the Fed Chairman. While Powell may have erred in believing inflation to be “transitory”, the War pushed inflation beyond expectation. This after battling Covid in 2020 and then trying to sustain recovery through 2021.
He is the only one who was first required to be an Alan Greenspan (from 2018 to 2021) and keep Unemployment low and prevent disinflation; and is now asked to be Paul Volcker (since Mar-22) and kill Inflation.
In contrast, we have to remember that Paul Volcker became Chairman only in Aug-79, when CPI was already very high at 9.84% and had been rising from at least 5.2% (Jan-77) if not from 2.95% (Aug-72). After him, Greenspan-Bernanke-Yellen were all tasked with keeping both Unemployment and Inflation low, by any means whatsoever, including inventing QE
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POWELL HAS A TOUGH JOB
To be fair, Jerome Powell possibly has one of the toughest tenures as the Fed Chairman. While Powell may have erred in believing inflation to be “transitory”, the War pushed inflation beyond expectation. This after battling Covid in 2020 and then trying to sustain recovery through 2021.
He is the only one who was first required to be an Alan Greenspan (from 2018 to 2021) and keep Unemployment low and prevent disinflation; and is now asked to be Paul Volcker (since Mar-22) and kill Inflation.
In contrast, we have to remember that Paul Volcker became Chairman only in Aug-79, when CPI was already very high at 9.84% and had been rising from at least 5.2% (Jan-77) if not from 2.95% (Aug-72). After him, Greenspan-Bernanke-Yellen were all tasked with keeping both Unemployment and Inflation low, by any means whatsoever, including inventing QE
To buy a single copy or subscribe for a year please click: https://kshitij.com/ustyields-forecast-payment-details/aug-22