13 Jun 2024

BREAKING >>> The Fed held rates unchanged as expected...

*FED HOLDS BENCHMARK RATE IN 5.25-5.5% TARGET RANGE And changed wording on inflation (from a "lack" of progress): *FED: INFLATION MADE MODEST FURTHER PROGRESS IN RECENT MONTHS BUT... The dot-plot was hawkish, adjust to just one 25bps cut in 2024 (and four 25bps cuts in 2025) *FOMC MEDIAN FORECAST SHOWS 25 BPS RATE CUTS IN '24 VS 75 BPS *FOMC MEDIAN FORECAST SHOWS 100 BPS RATE CUTS IN '25 VS 75 BPS There is another notable development: The longer-run estimate of the federal funds rate has gone up to 2.8% now, in the median forecast. That’s the second straight increase. Last time it had ticked up to 2.6% from 2.5%. So, in six months, policymakers have added more than a quarter percentage point to where they see the benchmark rate over the longer haul -- the so-called neutral rate. Additionally, The Fed increased its end-2024 expectations for inflation...but kept its unemployment expectations unchanged... There were 10 Fed members who saw rates at 4.625% or below by end 2024 in March... now there are none... There were NO dissents today, extending the streak of zero votes against the FOMC policy decision to 16 meetings, the longest period of no dissents since Alan Greenspan’s 17-meeting streak from August 2003 to September 2005. Today’s reassuring CPI report was relayed to FOMC members during the meeting, but many may be waiting for additional inputs (eg, PPI, PCE) before changing their forecasts. Bottom-line: The Fed re-arranged 2024-2025 dots from (2+3) to (1+4), and marked-to market their Core PCE forecast for year-end - signalling they are just being extra careful, and want some more evidence before committing to a cut. On our side, we still expect monetary policy to normalize in the months to come. We expect the Fed to continue their "meeting by meeting" approach with our base case being a cut in September. Indeed, it will take at least several more months of data to gain confidence that inflation is behaving in a manner the Fed finds acceptable. One key takeaway from today is that there’s a significant number of FOMC members that may prefer to wait even longer than September if upcoming data do not give them additional cover. Source: Bloomberg, www.zerohedge.com


This marketing document has been issued by Bank Syz Ltd. It is not intended for distribution to, publication, provision or use by individuals or legal entities that are citizens of or reside in a state, country or jurisdiction in which applicable laws and regulations prohibit its distribution, publication, provision or use. It is not directed to any person or entity to whom it would be illegal to send such marketing material. This document is intended for informational purposes only and should not be construed as an offer, solicitation or recommendation for the subscription, purchase, sale or safekeeping of any security or financial instrument or for the engagement in any other transaction, as the provision of any investment advice or service, or as a contractual document. Nothing in this document constitutes an investment, legal, tax or accounting advice or a representation that any investment or strategy is suitable or appropriate for an investor's particular and individual circumstances, nor does it constitute a personalized investment advice for any investor. This document reflects the information, opinions and comments of Bank Syz Ltd. as of the date of its publication, which are subject to change without notice. The opinions and comments of the authors in this document reflect their current views and may not coincide with those of other Syz Group entities or third parties, which may have reached different conclusions. The market valuations, terms and calculations contained herein are estimates only. The information provided comes from sources deemed reliable, but Bank Syz Ltd. does not guarantee its completeness, accuracy, reliability and actuality. Past performance gives no indication of nor guarantees current or future results. Bank Syz Ltd. accepts no liability for any loss arising from the use of this document.

Read More

Straight from the Desk

Syz the moment

Live feeds, charts, breaking stories, all day long.

Thinking out loud

Sign up for our weekly email highlighting the most popular posts.

Follow us

Thinking out loud

Investing with intelligence

Our latest research, commentary and market outlooks