FOMC. Policy in good place. Primary risk is trade policy.
Dec 11, 2019
–FOMC today. No change in stance expected barring an exogenous shock; policy is in a good place. CPI is released this morning, expected +0.2 with yoy Core 2.3% from 2.3 last. The average of the last twelve Core CPI readings is 2.18%. It hasn’t been below 2.0% since February of 2018. Why not just claim victory on the inflation target and let it go at that…
–Perhaps the Fed will more specifically address end of year funding pressures, as Zoltan Poszar from CS released a note indicating that the Fed hasn’t done enough to stifle the risk of a surge. In a way, EDZ9/EDH0 at -17.5 reflects this concern. Ordinarily, an inverted front spread is simply pricing the chance for a near-term Fed ease. However, April FF are only at a 4.5 bp premium to the current EFFR (FFJ0 98.495 or 1.505% vs EFFR 1.55%) so that’s only about a 20% chance of an ease in Q1.
Dec 11, 2019
–FOMC today. No change in stance expected barring an exogenous shock; policy is in a good place. CPI is released this morning, expected +0.2 with yoy Core 2.3% from 2.3 last. The average of the last twelve Core CPI readings is 2.18%. It hasn’t been below 2.0% since February of 2018. Why not just claim victory on the inflation target and let it go at that…
–Perhaps the Fed will more specifically address end of year funding pressures, as Zoltan Poszar from CS released a note indicating that the Fed hasn’t done enough to stifle the risk of a surge. In a way, EDZ9/EDH0 at -17.5 reflects this concern. Ordinarily, an inverted front spread is simply pricing the chance for a near-term Fed ease. However, April FF are only at a 4.5 bp premium to the current EFFR (FFJ0 98.495 or 1.505% vs EFFR 1.55%) so that’s only about a 20% chance of an ease in Q1.
www.chartpoint.com/f...isk-is-trade-policy/