via Bloomberg:
Excerpt:
Strategists are looking beyond the key issue of inflation for other potential market metrics that may cause the Federal Reserve to slow its aggressive cycle of interest-rate hikes. An ugly August reading for US consumer prices last week cemented bets on a third straight 75 basis-point move when the central bank hands down its next decision Wednesday. Setting aside a slowdown in inflation, other potential indicators that may cause policy makers to dial back their hawkishness include:
wider credit spreads
rising default risk
shrinking bond-market liquidity
Another threat that may prompt the Fed to slow the pace of tightening is shrinking Treasury liquidity. A Bloomberg index of liquidity for US sovereign is near its worst level since trading virtually seized up due to the onset of the pandemic in early 2020.
growing currency turmoil.
“If the euro fell out of bed, the Fed might not want that to get worse,” said John Vail, chief global strategist for Nikko Asset Management Co. in Tokyo. “It would be more a global financial stability concept rather than anything related to the dual mandate.”
This market is now out of the hands of the policymakers. The free market forces are in control now.
Forget the Fed bailing you out. Things are about to get a lot uglier.
Millions of people will suffer.
— HOZ (@MFHoz) September 21, 2022
Excess savings now seems to be non-existent. This is not great for the consumer.
With inflation running at exorbitant levels, consumers have been dipping into savings to manage household costs.
PC: Goldman Sachs pic.twitter.com/BikkUQ4Oh8
— Ayesha Tariq, CFA (@ayeshatariq) September 21, 2022
BREAKING: Stocks tumble as old white guy makes borrowing more expensive.
— Douglas A. Boneparth (@dougboneparth) September 21, 2022
Things the Fed said one year ago:
1. Rates will remain lower for longer
2. Unlikely to raise rates until 2024
3. We believe a recession is unlikely
4. Inflation is transitory and not a problem
5. Inflation should fall to 2% in 2022
Has there ever been a more wrong Fed?
— The Kobeissi Letter (@KobeissiLetter) September 21, 2022
— Not Jerome Powell (@alifarhat79) September 21, 2022
by mark000