Alright, so ahead of the Fed, we brought you a possibly useful guide that should help you interpret the statement or otherwise assist you in your probably fruitless efforts to read the tea leaves.
This was supposed to be a non-event (and maybe it will be) with the fireworks scheduled for June when a hike is almost fully priced. But thanks to the incoming inflation data, the move above 3% on 10Y yields, the flattening curve, and the suddenly resurgent dollar, an otherwise ho-hum statement has taken on a little more meaning.
Again, you can peruse the guide linked above for the backstory and the details, but what you’re looking for are changes to this (from the March statement):
On a 12-month basis, both overall inflation and inflation for items other than food and energy have continued to run below 2 percent. Market-based measures of inflation compensation have increased in recent months but remain low; survey-based measures of longer-term inflation expectations are little changed, on balance.
Without further ado, here are the bullet points:
- FED KEEPS RATES UNCHANGED, SAYS INFLATION `MOVED CLOSE’ TO 2%
- FED SAYS RISKS TO ECONOMIC OUTLOOK APPEAR `ROUGHLY BALANCED
- FED SEES INFLATION RUNNING NEAR `SYMMETRIC’ GOAL MEDIUM TERM
And here’s the redline:
The knee-jerk was lower in the dollar and falling yields (i.e., a dovish interpretation):
June odds holding.
- FED FUNDS FUTURES SHOW ODDS OF JUNE RATE HIKE STEADY AROUND 95%