US Rates Panic Again, As Fed Hawks Bleed Bonds
Traders bled the hawkish Fed narrative for everything it was worth on Thursday, as Jerome Powell mused about the merits of an accelerated tightening cycle.
"There’s something in the idea of front-end loading," Powell reckoned, during an IMF panel discussion in Washington. It’s "absolutely essential," he said, to "restore price stability," without which economies "don't work."
He also confirmed what scarcely needed confirmation: A 50bps hike is on the table for next month's FOMC meeting. Bo
Powell’s statements about the economy beginning in Q4 2021…
Topic | Initial remark | Ultimate conclusion
Inflation | Transitory | Longer term
Impact of rate hikes | Soft landing | It’s going to be very challenging
Stagflation? | Overblown | Coming to you in 2023!
He reminds me more of a weatherman than anything else.
Right – and the 7 to 14 day forecast is always reverting to the mean!
Most recent peak size of the Fed’s balance sheet was $8,965,487,000,000 of total assets as of 4/13/2022. One week later (the most recent data point), it’s down by a little less than $10,000,000,000.
If the balance sheet has (finally) stopped growing, it has only done so just recently.
H-Man, this is starting to resemble that terrible commercial plane crash in China which ended in a nose dive.
Who do I listen to, Kolanovic or Powell? I guess I know who controls the purse strings and is able to withhold the allowance because I over-partied and stumbled in the door, drunk, singing “This time it is different!” — a bit after midnight. I think Kolanovic taught me that song.
Maybe it is time to listen to the grownups. What are they called, “bond vigilantes”? The name gives me visions of a posse of old men carrying 12-gauge shotguns with #3 birdshot. Yea, maybe I should listen if Powell is leading them…
The bond vigilantes of today are mid-aged women and men with children who were just forced back into the office after two years of remote work. They’re ready to tear this down and pile on the most obvious trade of the decade to make a name for themselves as a springboard to starting their own hedge funds.
The vigilantes of yesteryear collapsed under the weight of the printing press.