Fed Watch: Waller Cometh
"Fed Call" remains in place despite the "soft landing" attempt.
Discussion
In a The Market note this morning I flagged the fact the December Fed Funds futures contract was drifting down to the point the Fed would likely want to push back in order to maintain the tight policy in place that will allow them to “go for” a soft landing. My thesis was Waller would push back tonight, but it appears the Fed is uncomfortable enough with the post-CPI easing of financial conditions that it felt the need to send FRB San Francisco President Mary Daly out for an unscheduled CNBC appearance to push back on the rampant sentiment that the Fed is done.
Daly is at the bottom of the dot plot, yet on CNBC she is sticking with her comments from a couple of days ago that a couple more hikes this year is still a possibility. Folks will dismiss this because of her low dot, but this is very intentional signaling by the Fed.
In short: Waller Cometh. (HY CDX confirms.)