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Discussion
In response to this morning’s hot inflation data embedded in the Q1 GDP report, the Fed further pushed out rate cuts via Nick Timiraos. One could be forgiven for asking: why?
This is why:
Price data for March will be released by the Commerce Department on Friday. Thursday’s report suggested that figures for January and February are likely to have been revised higher from already firm levels and that inflation didn’t ease and may have picked up in March, keeping the 12-month inflation rate around 2.8%.
No bueno.
Second, Yellen went out - likely in an attempt to calm markets having a mini panic attack about hot inflation data - and had nothing of substance to say, a reasonably good indication that she knows she is hamstrung by hot data. How do I know she’s hamstrung?
Because she said housing inflation is likely to continue trending lower over the course of 2024.
Nonsense, and she knows it.
Look for stocks and bonds to close at new lows tomorrow heading into a weekend of pondering the unlikelihood “Jay and Janet” coming out dovish on May 1.