The Fed: Hilariously Dovish
Discussion
Last night FED Governor Christopher Waller gave a speech that one could be forgiven for interpreting as hawkish pushback to June rate cut pricing. He even followed up at the beginning of the Q&A with a hawkish response to a sarcastic question from the moderator asking “when and by how much will the Fed cut rates?” with: “Someday! Maybe! Not soon!”
But then roughly 20 minutes in he released the doves.
The United States is currently running a fiscal deficit to the tune of 5-10% of GDP, consumer net worth is at an all-time high and rising, and underlying inflation is very obviously nowhere close to on track to durably return to 2%. So, this is not actually humorous - it’s sad, frankly. But it’s so sad that you have to laugh.
As crudely illustrated by my Xwitter direct message to a fellow FED watcher, with a straight face Waller declared that the current tightening of credit spreads is due to a strong economy and a large amount of capital flooding into private credit, and NOT the result of a loosening of monetary policy.
Absolutely absurd gaslighting on all fronts, and it absolutely will continue until Election Day.