FOMC Minutes Reveal Divided Fed on Rate Cuts Amid Strong Economic Data  Since the Federal Open Market Committee (FOMC) meeting on September 18th, the bond market has experienced significant losses, while gold, stocks, and the U.S. dollar have all posted modest gains. Despite what initially seemed to be a more dovish stance from the Federal Res...

Gold Shines as Fed Holds Rates, Market Awaits Dovish Signals  Since the last FOMC meeting on June 12, gold has seen significant gains, while the dollar and crude oil have underperformed. Stocks and bonds have risen as well. US macroeconomic 'hard' data has generally weakened since the last FOMC meeting, despite occasional positive blips. This ...

CPI Falls 0.1% in June, Fueling Rate Cut Speculations  Heading into today's CPI release, expectations were high for more signs of a return to disinflation. These expectations were exceeded as headline consumer prices fell 0.1% month-over-month in June, contrasting with the forecasted 0.1% increase, marking the largest month-over-month decline ...

Updated Rate Outlook: Anticipating 2-3 Fed Cuts Amid Market Volatility  As we focus on the Fed's upcoming announcement on July 31st, we want to reiterate our prediction of two to three rate cuts this year, totaling 75 basis points. We also have some updated thoughts based on recent developments. Current yields for two-year and ten-year bonds a...

Revisiting Rate Outlook Amid Political Reactions and Fed Anticipations  As the 10-year Treasury approaches the lower end of our 4.3% to 4.5% range, amidst analyzing jobs data and preparing for the Federal Reserve's next moves, it's a fitting moment to reassess and clarify our rate outlook. Before delving deeper, it's prudent to consider the po...

Mixed CPI Report Sparks Debate on Potential Rate Cuts  The latest CPI report exceeded expectations in three out of four key metrics, with only headline CPI slightly below the anticipated 0.4%. This has sparked discussion among analysts about whether it's enough to prompt an earlier rate cut. While some believe it could influence a cut in Septe...

Surging Inflation Challenges Rate-Cut Hopes  Recent inflation data has surprised observers with an upward trend, putting pressure on doves hoping for earlier rate cuts. Today's release of the Core PCE Deflator, a key inflation indicator favored by the Fed, is crucial. Last month's increase in the headline deflator and yesterday's rise in core ...

Federal Reserve's Puzzling Lean Towards Rate Cuts Despite Loose Monetary Policy and Positive Economic Indicators Sparks Debate  Despite undergoing one of the quickest cycles of interest rate increases, the current monetary policy remains unusually loose. There is persistent pressure for rate expectations to rise further as the Federal Reserve ...

Federal Reserve's Unconventional Gamble: Reserves, Not Economy, Drive Rate Cut and Quantitative Tightening Decisions  The Federal Reserve's decision-making, particularly regarding rate cuts and quantitative tightening, is primarily driven by the availability of reserves rather than the state of the economy. The shift towards a more dovish stan...

Financial Markets Navigate Choppy Waters as 'Goldilocks' Narrative Clashes with Rate Cut Expectations: A Week of Contrasting Fortunes, Volatility, and Uncertain Futures  This week, the realization struck that the 'goldilocks' narrative clashes with the substantial rate cuts anticipated for the next year. Goldman issued a warning, suggesting th...