DXY is back.
AUD has entered freefall.
CNY is fine.
Gold is confused.
Metals are nervous.
Big bear intact.
EM swoon.
Junk hiccupped finally.
As yields broke higher.
Stocks kept falling.
There wasn’t any earthmoving data. All eyes are on Jay Powell. Goldman says he’s going to break.
Goldman economist David Mericle expects Powell to modify his statement from the July FOMC press conference that the FOMC is “well positioned” to wait for more information. Instead, he might note that the FOMC is well positioned to address risks to both sides of its mandate but emphasize that downside risks to the labor market have grown following the July employment report, while reiterating that tariffs are likely to have only a one-time effect on the price level, a position that will be viewed as dovish by the market.
Maybe so, but I don’t see him signalling a September cut. Neither does the AUD.
My best guess is that Powell is going to signal that zero immigration has ended the post-COVID disinflation for lower-educated workers in the US, and this is driving a rebound in services inflation.
That said, the new attack on the Fed by King Trump, which opened this week, targeting favourable mortgages, etc., looks a lot like a pogrom, so who knows how long they can hold out?
