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Financial Conditions Just Eased Dramatically. Here’s What It Means
If you're wondering just how much of the financial conditions tightening impulse seen from late-July through October was reversed by this month's dramatic decline in US yields, higher stock prices and a weaker dollar, the answer is a lot.
As summarized here on Tuesday afternoon following the soft October CPI report, the enormous drop in five-year yields, the dollar's worst session in a year and the raucous equity rally were all conducive to easier financial conditions.
A quick check on Goldman
This article does a good job of touching on a number of subjects I’ve been thinking about recently.
That’s it. That’s the comment.
I wonder how much the Fed cares about FCI as measured by sellside gauges. When FCI was very loose in Jan and Jul 2023, I can’t recall any overt Fed reaction. I suspect the Fed may pay more attention to other gauges of financial conditions, e.g. rates, SLOOS, M2, etc.