Powell Sticks With the Hawkish Script As we thought, Federal Reserve Chair Jerome Powell confirmed that the Fed is leaning toward beginning the rate hike cycle this month with a

Thoughts Ahead of Powell In recent decades, the Fed has repeatedly held back from tightening, or even eased, in response to crisis events and financial market instability. We know the

Tuesday Morning Note, 2/22/22 Note: I am forgoing the usual beginning of the week format in favor of a deeper dive into the Fed. I will circle back to data

Next Steps For Monetary Policy The yield curve continues to flatten relentlessly: The curve typically flattens during tightening cycles and consequently this should not be entirely unexpected. That said, I

Monday Morning Notes, 2/28/22 If You Don’t Have Time This Morning As of the end of last week, Fed officials were still debating the size of the first rate hike

Fed Ready to Respond to Higher Inflation The minutes of the January FOMC meeting were light on details, reflective of the high degree of uncertainty among FOMC participants with respect

Monday Morning Notes, 02/14/22 If You Don’t Have Time This Morning Last week’s inflation report was the latest number telling us that the Fed is behind the curve. As we

Deeply Behind the Curve The Fed is deeply behind the curve on inflation. There is no other story at this point. Our baseline outlook is the equivalent of seven 25bp

Thoughts Ahead of CPI Number The BLS releases the January CPI report tomorrow. Wall Street expects core-CPI inflation to be at 0.5%, consistent with the 0.45% prediction from the Cleveland

Monday Morning Notes, 02/07/22 If You Don’t Have Time This Morning Assuming the hawkish data flow continues, market participants will likely continue to price in more rate hikes, including a

Data Will Drive Policy Outcomes The dominant theme from incoming Fed speak is that almost everything is on the table. The only thing that we know for sure is that

Monday Morning Notes, 01/31/22 If You Don’t Have Time This Morning The Fed needs to get rates closer to neutral to be prepared for ongoing inflation overshooting in the second

Hawkish Pivot Still Not Complete The Fed cleared the way for the March rate hike as expected. Also as expected, Federal Reserve Chair Jerome Powell emphasized the Fed’s new narrative

While We Wait for the Fed Clients frequently ask what I am watching for to see if the Fed’s inflation forecast will go sideways again. This is good topic to

Monday Morning Notes, 1/24/22 If You Don’t Have Time This Morning This week the Fed will take another step towards a March rate hike. Powell will stick to the Fed’s

Tuesday Morning Notes, 1/18/22 If You Don’t Have Time This Morning FOMC meeting participants have all reshaped their outlooks as needed to conform with the Fed’s narrative shifts. The stage

Monday Morning Notes, 1/10/22 If You Don’t Have Time This Morning There is nothing to stop the Fed from declaring the economy is at full employment at the January meeting

Inflation, Balance Sheet (Again!), Bullard CPI came in hot with core inflation up 0.6% compared to expectations of 0.5%. Annualized, core inflation was 6.8% in December and 5.5% over the

On Ending QE I want to extend my note from last night. As I said, there is no reason to continue asset purchases at this point. Continued quantitative easing is

Quick Balance Sheet Thoughts We are getting a lot of questions about the Fed’s plans for the balance sheet. Unfortunately, concrete information is hard to come by simply because FOMC