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Watershed CPI yesterday and 2 rate cuts now becoming consensus. PCE number is likely to be even softer. However I think if Fed pre empt with rate cut end this month the rally still has legs but if rate cut in Sept might be too late and become classical rate cut when economy slows significantly and will be short term weak market until more rate cuts unfold.
I'm hopeful but not optimistic that Powell will have enough political courage to cut end this month
Jun CPI 2.97%
Jun Core CPI 3.27%
As of 11 Jul Cleveland Fed expecting
Jul CPI 3.01%
Jul Core CPI 3.33%
Jun PCE 2.40%
Jun Core PCE 2.39%
Jul PCE 2.47%
Jun Core PCE 2.47%
(13-06-2024, 11:28 AM)specuvestor Wrote: 2024 Fed target cuts reduced to 1 due mainly to 4 hawkish members looking at no cuts this year while both the chair and vice chair are more moderate
Market however looking at 2 cuts this year versus a hike back in April. Mood swing continues but US equity markets amazingly buoyant even as core PCE inflation target inexplicably raised to 2.8% from 2.6%
May CPI 3.27%
May Core CPI 3.42%
As of 12 Jun Cleveland Fed expecting
Jun CPI 3.15%
Jun Core CPI 3.52%
May PCE 2.62%
May Core PCE 2.56%
Jun PCE 2.55%
Jun Core PCE 2.60%
Before you speak, listen. Before you write, think. Before you spend, earn. Before you invest, investigate. Before you criticize, wait. Before you pray, forgive. Before you quit, try. Before you retire, save. Before you die, give. –William A. Ward
Think Asset-Business-Structure (ABS)
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15-08-2024, 02:20 PM
(This post was last modified: 15-08-2024, 02:32 PM by specuvestor.)
On hindside it was more watershed that I expected when Fed didn't cut end of July. But going forward we should be expecting a 25bp cut every FOMC till around 4%, sans possibly November election; especially with Aug headlines CPI and PCE looking to be softer though Core numbers stay sticky.
Jul CPI 2.90%
Jul Core CPI 3.17%
As of 14 Aug Cleveland Fed expecting
Aug CPI 2.60%
Aug Core CPI 3.21%
Jul PCE 2.56%
Jul Core PCE 2.64%
Aug PCE 2.41%
Aug Core PCE 2.77%
(12-07-2024, 12:01 PM)specuvestor Wrote: Watershed CPI yesterday and 2 rate cuts now becoming consensus. PCE number is likely to be even softer. However I think if Fed pre empt with rate cut end this month the rally still has legs but if rate cut in Sept might be too late and become classical rate cut when economy slows significantly and will be short term weak market until more rate cuts unfold.
I'm hopeful but not optimistic that Powell will have enough political courage to cut end this month
Jun CPI 2.97%
Jun Core CPI 3.27%
As of 11 Jul Cleveland Fed expecting
Jul CPI 3.01%
Jul Core CPI 3.33%
Jun PCE 2.40%
Jun Core PCE 2.39%
Jul PCE 2.47%
Jun Core PCE 2.47%
Before you speak, listen. Before you write, think. Before you spend, earn. Before you invest, investigate. Before you criticize, wait. Before you pray, forgive. Before you quit, try. Before you retire, save. Before you die, give. –William A. Ward
Think Asset-Business-Structure (ABS)
Posts: 3,721
Threads: 6
Joined: Oct 2012
Reputation:
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CPI came in almost as expected with hopes of 50bp cut in Sept evaporated but market is still looking at 50bp cut in Nov and Dec which I disagree. Best case is to head towards 4% fed funds with 25bp cuts as headlines inflation probably hit 2% by 4Q. Fixed Income market is still irrational after a 2 year negative yield curve trying to flip to more reasonable positive.
Aug CPI 2.531%
Aug Core CPI 3.197%
As of 11 Sep Cleveland Fed expecting
Sep CPI 2.29%
Sep Core CPI 3.11%
Aug PCE 2.33%
Aug Core PCE 2.77%
Sep PCE 2.09%
Sep Core PCE 2.66%
(15-08-2024, 02:20 PM)specuvestor Wrote: On hindside it was more watershed that I expected when Fed didn't cut end of July. But going forward we should be expecting a 25bp cut every FOMC till around 4%, sans possibly November election; especially with Aug headlines CPI and PCE looking to be softer though Core numbers stay sticky.
Jul CPI 2.90%
Jul Core CPI 3.17%
As of 14 Aug Cleveland Fed expecting
Aug CPI 2.60%
Aug Core CPI 3.21%
Jul PCE 2.56%
Jul Core PCE 2.64%
Aug PCE 2.41%
Aug Core PCE 2.77%
Before you speak, listen. Before you write, think. Before you spend, earn. Before you invest, investigate. Before you criticize, wait. Before you pray, forgive. Before you quit, try. Before you retire, save. Before you die, give. –William A. Ward
Think Asset-Business-Structure (ABS)
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