DXY up:
AUD shredded:
North Asia down:
All commodities reversed. Copper was pulverised:
Mining mauled:
EM stocks:
Junk down:
Big curve flattener:
Stocks sqibbed it:
The Fed is hawking up as markets once again overcook inflation expectations and stampede commodities in a reflexive and internecine meltup that has almost no relationship to the real economy.
Governer Waller was unimpressed. Goldman:
Comments by Governor Waller in a speech today raise the risk that the first cut could come later than our forecast of July.
Waller said that he would “need to see several more months of good inflation data before [he] would be comfortable supporting an easing in the stance of monetary policy.”
With only two months of inflation readings between now and the July meeting, a threshold of “several” months would suggest that the bar for inflation alone to motivate cuts is fairly high.
We have not made any changes to our forecast at this stage, however, as his views may not be representative of the FOMC as a whole and further softening in the labor market or activity data over the next couple of months—in combination with moderate improvement in the inflation data—should convince the FOMC tobegin normalizing policy sooner than Waller’s timeline.
And minutes did support his less dovish-than-hoped view:
Various participants mentioned a willingness to tighten policy further should risks to inflation materialize in a way that such an action became appropriate.
…A number of participants noted uncertainty regarding the degree of restrictiveness of current financial conditions and the associated risk that such conditions were insufficiently restrictive on aggregate demand and inflation.
Although monetary policy was seen as restrictive, many participants commented on their uncertainty about the degree of restrictiveness.
As expected, the AUD is still trapped in its range.
