If you’re looking for dovish, conciliatory soundbites from Fed officials, Jim Bullard isn’t your guy these days.
Since the onset of rate hikes early last year, it’s occurred to me time and again that many market observers either didn’t pay much attention to Fedspeak prior to the inflationary 2020s or else are relative newcomers to the discussion.
Bullard hasn’t always been an archhawk. Anything but, actually. He’s a born-again hawk, and the same is true of Neel Kashkari. Esther George those two men are most assuredly not.
But, in the upside down world that is this century’s “Roaring Twenties,” Bullard has become something of a standard-bearer for the hawkish contingent, an outcome that’s still a bit difficult to come to terms with.
He was back at it on Friday, two days after what many assume was the last Fed hike of the cycle. I’m not sure I’d describe Bullard’s remarks as “aggressive,” but he was upbeat about the economy, which is tantamount to being hawkish.
The resilient labor market suggests consumers will hold up, he said, during remarks in Minneapolis. The jobs market, Bullard emphasized, is very tight, and it’ll take time for it to cool off.
April’s jobs report, released just hours earlier, certainly underscored the resilient narrative, even as revisions tempered the headline beat.
Market pricing continued to suggest elevated odds of easing into the back-half of the year. That, even as the front-end of the Treasury curve sold off sharply on the jobs beat and accompanying AHE print, which was very hot. Friday’s bear flattener was pronounced.
Bullard appeared to brush aside bank woes, calling SVB “quirky” and maintaining that residual stress across regional lenders “can be managed.”
His base case isn’t a recession, although he acknowledged the risk of a downturn. Rumors of the economy’s demise are greatly exaggerated, he mused.
If you ask Bullard, inflation can be cajoled lower without a large increase in unemployment. He said that although the Fed has done a lot in a compressed time frame, there’s still a lot of inflation.
That is a minor softening. Perhaps his models must be signaling something?