Goldman Presents: “FOMC Alpha” Or, How To Trade The Fed

Goldman Presents: “FOMC Alpha” Or, How To Trade The Fed

Do you want to trade around the June Fed meeting? Of course you do. After all, what's the point of a bunch of central bankers getting together if it's not to move markets? You already know the setup. A hike is baked in. But long-term rates ain't buyin' the reflation narrative. So you know, flatter curve. Specs did trim the eurodollar shorts through Tuesday. They also pared 10Y longs. That would seem to suggest some trepidation, but then again this is spec positioning which is usually a contr
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One thought on “Goldman Presents: “FOMC Alpha” Or, How To Trade The Fed

  1. “But long-term rates ain’t buyin’ the reflation narrative”

    The Fed is raising into weakness for the first time since the 1930’s. A recession is way overdue, and bubbles abound everywhere. If Janet has a clear plan (and I’m not certain she does) I suspect it’s to get rates high enough so when the recession hits, she has some headroom to cut. That is, she’ll cut rates to battle the recession she is precipitating.

    I know, it’s circular logic, but it makes as much sense as anything else the Fed has done since about 2010. She pops multiple asset bubbles and Trump gets stuck holding the bag, like Shrub in late 2008.

    Hence, the 10y isn’t reacting much to Fed hikes, because major bondholders know rates are just going to come down again, and soon. And depending on the depth of the recession, they’ll go to zero. Again.

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