FED Watch: "Various"
The Fed's 4D chess match with the stock market continues. Make no mistake: Rate hikes cometh.
Discussion
Building on this morning’s note, the May FOMC minutes released this afternoon revealed yet another intentional obfuscation of the Fed’s very clear intention to tighten policy relative to current market expectations.
At present, the market is priced for some easing at the September FOMC…
…but we know from Waller’s interview yesterday the Fed is unlikely to cut until “later this year or early next year.”
Today, the Fed released May FOMC minutes that stated:
Various participants mentioned a willingness to tighten policy further should risks to inflation materialize in a way that such an action became appropriate.
“Various” is not standard FED minutes language. It’s very vague, and obviously intentionally so given the Fed’s desire to avoid “untoward” stock market volatility.
Make no mistake: Rate hikes cometh.
It seems like the Fed is working toward diluting the value of the SEP by going toward true data dependence which means no cuts for 2024 and probably removing cuts for 2025.