A lot – and we mean a lot – has happened since the last FOMC meeting on March 19th. Bonds, stocks, and commodites have colppased; gold has made solid gains and the dollar is unchanged as Trump’s ‘Liberation Day’ malarkey smashed the punchbowl…
Source: Bloomberg
Funding markets are starting to break…
Source: Bloomberg
Rate-cut expectations have surged from around 2 cuts to 4-5 cuts this year…
Source: Bloomberg
In the three weeks since the FOMC meeting, hard data has improved significantly while soft data has crashed…
Source: Bloomberg
So, with all that in mind, and having heard multiple Fed speakers since (including the Chair himself) all singing from the same hymn-sheet – ‘lots of uncertainty’… ‘we have time to pause’ etc… we will see what exactly The Fed wanted us to take from the last meeting…
Key Headlines include (via Newssquawk):
RATES
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All participants viewed it appropriate to keep interest rates unchanged in light of elevated uncertainty around economic outlook
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Participants remarked uncertainty about net effect of government policies on the outlook was high, making it appropriate to take a cautious approach
STANCE
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A majority of participants noted potential for inflationary effects from various factors to be more persistent than they projected
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Participants assessed fomc was well positioned to wait for more clarity on the outlook
INFLATION
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Almost all participants viewed risk to inflation as tilted to the upside, risks to employment as tilted to the downside
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Some participants observed fomc may face difficult tradeoffs if inflation proved more persistent while the outlook for growth and employment weakened
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Several participants emphasized that elevated inflation could prove to be more persistent than expected
BALANCE SHEET
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Almost all participants supported slowing pace of balance sheet runoff; several did not see a compelling case for a slower runoff pace
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A few participants cautioned an abrupt repricing of risk in financial markets could exacerbate effects of any negative economic shocks
PROJECTIONS
Read the full FOMC Minutes below:
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