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About That Fed “Policy Mistake”…
Markets care about two things these days:
how long will the low vol. regime last? (or, put differently, how long will the carry party go on?);
did the Fed make a policy mistake by hiking into a deflationary backdrop?
On Wednesday, Goldman set out to answer both questions.
You can find the bank's assessment on whether you should become a vol. seller here.
As to the policy mistake argument, some have suggested that the explanation for the Fed's "stubborn" hawkishness (to quote BofAML) is tha
Goldman is asking all the wrong questions. Their credibility is suspect given that discourse. The real question is how is the system working? And…is there a tacit presumption about efficacy of monetary policy, when that efficacy doesn’t exist?