DXY sagged Friday night:
AUD launched:
Gold and oil popped:
And dirt:
Big miners jumped:
EM stocks firmed:
Junk too:
The Treasury curve steepened markedly:
And stocks took off:
Why? This:
Some officials are more eager to calibrate their rate setting to reduce the risk of overtightening.⁰
But they won’t want to dramatically loosen financial conditions if and when they hike by 50 bps (instead of 75).⁰
This meeting could allow officials to get aligned on next steps— Nick Timiraos (@NickTimiraos) October 21, 2022
“A half-point hike at this meeting would result in a dramatic loosening of financial conditions no matter what language they paired it with,” said @jasonfurman ⁰
“But by December, you can keep financial conditions very restrictive even with 50.”— Nick Timiraos (@NickTimiraos) October 21, 2022
Friday night’s action gave the Fed its answer. Soft pivot and reflation will fly. AUD included.
