Yesterday's FOMC left the policy rate unchanged at 5.25-5.50%. The statement included many changes including that the committee does not expect it will be appropriate to reduce the target rate until it has gained greater confidence that inflation is moving sustainably towards 2 percent. Powell continued to assert the need to get inflation back to 2% and noted that the policy rate is likely at its peak. The Fed will be data dependent. They want to see continued good inflation prints, the 6 months of "good" inflation prints doesn't seem to be enough to give the FOMC full confidence to declare victory yet. Powell described themselves as being in a "risk management mode". Powell seemed to indicate that a March rate cut is out of the question, but we'll see. And deep fakes of Powell pressers are a thing (and pretty funny depending on your taste)
Powell still had an easier day than Zuckerberg.
ECI and ADP data both were lower than expected with ECI below 4% (annualized), theoretically easing some risk of wage price spirals. In other news, New York Community Bancorp shares fell greater than 30% after cutting their dividend following posting a loss and building up reserves (especially for office loans) as concerns about regional banks regained some attention.
Yields fell with the 10Y below 4% and stocks fell as well.
On the day ahead it's BOE Rate Decision, jobless claims, nonfarm productivity and ISM mfg.
XTOD: Today wasn't about QRA it was Fed pushing back on easing, bad reaction to decent earnings and guidance, and NYCB. But the headwind from QRA stepped up as 519BN Net new money from coupon sales will be absorbed and -317BN of Bills will result in RRP stabilizing and delay QT Taper
XTOD: Not one question for Powell on NYCB or the BTFP
XTOD: which acronym will replace BTFP and how many trillions will it inject?
XTOD: I get that no one should mechanically follow Taylor rules. But it's interesting that all three versions tracked here by the Atlanta Fed say you're too tight.
https://x.com/dampedspring/status/1752802168950718616?s=20
https://x.com/StevenKelly49/status/1752788859018965256?s=20
https://x.com/zerohedge/status/1752850237100540088?s=20
https://x.com/greg_ip/status/1752838559843725725?s=20
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