DXY is refusing to go away.
AUD is going away.
CNY not.
I’m wary of gold here.
Metals dead cat.
Miners plain dead.
EM rolling.
Junk doesn’t care.
Yields are falling in a growth scare.
Stocks could catch that bug.
At issue is a Fed that the market has gotten wrong.
In their discussion of inflation, many participants observed that overall inflation remained somewhat above the Committee’s 2 percent longer-run goal.
Participants noted that tariff effects were becoming more apparent in the data, as indicated by recent increases in goods price inflation, while services price inflation had continued to slow.
A couple of participants suggested that tariff effects were masking the underlying trend of inflation and, setting aside the tariff effects, inflation was close to target.
With regard to the outlook for inflation, participants generally expected inflation to increase in the near term.
…In support of the Committee’s goals, almost all members agreed to maintain the target range for the federal funds rate at 4-1/4 to 4-1/2 percent.
A couple of members preferred to lower the target range for the federal funds rate by 25 basis points at this meeting.
These members judged that, excluding tariff effects, inflation was running close to the Committee’s 2 percent objective and that higher tariffs were unlikely to have persistent effects on inflation.
Furthermore, they assessed that downside risk to employment had meaningfully increased with the slowing of the growth of economic activity and consumer spending, and that some incoming data pointed to a weakening of labor market conditions, including low levels of private payroll gains and the concentration of payroll gains in a narrow set of industries that were less affected by the business cycle.
A couple of dovish governors positioning themselves for Trumpian ascendancy does not a rate cut cycle make.
Jay Powell is firming as hawkish at Jackson Hole.
AUD down.
