DXY is on the march again:
AUD was thumped:
Oil is very sticky:
Commods hung on but miners sank (no chart):
EM stocks are a mess:
EM junk is fooked:
As the Treasury curve inverted MOAR:
And stocks shat the bed:
First up, ADP was strong:
ADP National Employment Report: Private Sector Employment Increased by 239,000 Jobs in October; Annual Pay was Up 7.7%.
Nothing dovish about that and nothing dovish is what the Fed delivered.
It did downshift the expected pace of tightening but, with that, lifted terminal rate expectations:
The Committee anticipates that ongoing increases in the target range will be appropriate in order to attain a stance of monetary policy that is sufficiently restrictive to return inflation to 2 percent over time. In determining the pace of future increases in the target range, the Committee will take into account the cumulative tightening of monetary policy, the lags with which monetary policy affects economic activity and inflation, and economic and financial developments. In addition, the Committee will continue reducing its holdings of Treasury securities and agency debt and agency mortgage-backed securities.
But Powell was all Volcker and no Burns. Nikileaks was strident:
The 3 takeaways from Powell’s press conference:
1) The Fed could step down to a slower pace in Dec even if inflation data don’t improve much
2) If there had been new estimates of the terminal funds rate released today, they would have moved up
3) Not ready to talk about a pause— Nick Timiraos (@NickTimiraos) November 2, 2022
Powell: “The question of when to moderate the pace of increases is now much less important than the question of how high to raise rates and how long to keep monetary policy restrictive.”
— Nick Timiraos (@NickTimiraos) November 2, 2022
Powell: “It is very premature to be thinking about pausing…. Very premature.”
— Nick Timiraos (@NickTimiraos) November 2, 2022
The asymmetric risk framing is the key. That’s ‘hike until something breaks’.
Don’t fight the Fed.
