As usual, the only thing to kneejerk almost as fast as stonks after the FOMC statement release, is the barrage of bite-sized comments from the strategist/economist peanut gallery. And since today is no difference, with the digital ink on the FOMC statement still wet so to speak, here is the first barrage of sellside reactions.
Omair Sharif of Inflation Insights
“The FOMC statement was more dovish on inflation, albeit still cautious, but the one word change from the ‘pace’ of future rate hikes to the ‘extent’ of future hikes tells you that when the Minutes come out, we’ll likely read that officials have begun to debate when to pause. “It seems that the market is taking this as somewhat hawkish because the Fed actually plans to follow through and get to 5.00%-5.25% on the funds rate as opposed to market participants’ hope that perhaps this would be the last hike. No such luck, but I think acknowledging that inflation has moderated somewhat and signaling that the ‘pause’ debate is underway is dovish.”
Ben Jeffery at BMO Capital Markets says:
“Biggest takeaway from the FOMC statement, along with the widely-expected 25 bp rate hike, was that the Fed opted to leave ‘ongoing’ within the formal language and indicated that there are more tightening moves to be realized this cycle.”
Priya Misra at TD Securities says
“So far slightly hawkish message — inflation has eased but remains elevated. They hiked 25bp and likely will hike a few more times in their base case. Should move front end rates higher. Not good for risk assets so long end might keep a bit of a bid. Focus on whether Powell talks about his current view on the terminal rate and fin conditions at the presser.”
Dennis DeBusschere, of 22V Research
“As always, wait for the press conference, and in particular, how much Powell focuses on pain. The need for the economy to take some pain, or not. At the last meeting, he was very pain-focused.”
Avery Shenfeld, chief economist at CIBC Capital Markets
“Nothing to see here, folks.” But the retention of “ongoing increases” guidance could be, essentially, an effort to address the easing in financial conditions: “That could be an effort to push the bond market towards higher yields in the here and now.”
Childe-Freeman, Bloomberg Intelchief G-10 FX strategist, says keep looking
“The dollar is up marginally on the Fed’s confirmed hawkish bias, but this could prove a short-lived bounce, as there’s nothing particularly new here and nothing to alter what remains a dollar-negative narrative this year.”
Neil Dutta, Renaissance Macro
“Interesting change in the second-to-last paragraph. They took out ‘public health’ when discussing ‘assessments will take into account a wide range of information…’ — Lines up with Biden’s ending of the public health emergency. I know it is coming in May, but nonetheless.”
John Bellows, Western Asset
“There is only so much Powell can say to push back on the divergence between markets and the Fed.”
developing
Tyler Durden
Wed, 02/01/2023 – 14:30
