Fed monetary policy tightening (+525 basis points of interest rates hike + $1.15 Trillion of Fed balance sheet reduction) since 2022 has been quite brutal
2023 has been a miracle so far with headline inflation declining to 3% WITHOUT a recession and no increase in unemployment rate. But can it last? What could be the lagged effects of such a tightening? (chart courtesy of Tavi Costa)
central banks have become dominant holders
Source: Michel A.Arouet
Central bank liquidity and the Sp500 are experiencing a rather large divergence. Will it matter?
Source: Markets & Mayhem
Will Lagarde / ECB cut rates sooner than anticipated ?
Source: AndreasSteno
NY FED recession probability is on highs
Unemployment is going up. Similar pattern was right before most previous recessions. Source: Wall Street Silver
Even with gold near ATHs, central banks are still buying record tonnage of yellow metal...
Source: FT
Markets are now betting on big rate cuts next year
This chart shows that money markets have raised policy-easing wagers since the middle of October: by September 2024, the FED should have cut by 70 basis points, the ECB by 65 basis points and the BoE by 40 basis points. (pricing is derived from swap rates tied to policy-meeting dates) Source: Bloomberg
Key Events This Week:
1. Fed Chair Powell Speaks - Wednesday 2. Initial Jobless Claims - Thursday 3. Fed Chair Powell Speaks - Thursday 4. Consumer Sentiment data - Friday 5. ~10% of S&P 500 reports earnings this week 6. Total of 12 Fed speaker events All attention remains on the Fed. Source: The Kobeissi Letter
