Euro area PMI's were weak, while U.S. PMI's were solid with services leading the way.
In Fed land, Bostic supported 50bps because he was convinced inflation was sustainably heading back to target while risk to employment were increasing. Bostic's full speech is here.
Kashkari was also out with an essay in support of cutting 50bps, largely echoing Bostic's view and like Bostic emphasizing that policy remains restrictive, but that they view the balance of risk as having shifted. Kashkari does not rule out that the neutral rate may be structurally higher. Kashkari then also asks how might the Fed be surprised and of course hits on largely the same two questions I posed in my kinda a FOMC recap. Those questions are: (1) could the economy be closer to recession than we think and (2) could inflation be reignited. Positing that he doesn't see much risk that either of those are major risk at present. He also doesn't rule out the inevitable "shocks". Overall he is very much in the "soft landing" camp and that there is no need to move too fast with rate cuts. You can find Kashkari's essay here.
If you want to go full dove, Goolsbee comments would lead you to believe rates should probably be zero.
The Fedspeak reminded me of what I wrote at the start of the year:
I have no clue what views will be right in 2024, but I'm going to guess that the advice Paul Volcker left in his 2018 biography, "Keeping At It", may not be entirely lost on JPOW. That advice is: "A lesson from my career is that such successes [in maintaining low inflation] can carry the seeds of its own destruction. I've watched country after country, faced with damaging inflation, fight to restore stability. Then, with victory in sight, the authorities relax and accept a "little inflation" in the hope of stimulating further growth, only to se the process resume all over again."
Clearly the Fed believes inflation is nearly or completely beat, but I guess we'll see. Don't worry there are only like a dozen more Fed appearances this week.
Either way stocks hit new highs, so did Gold and bond yields rose a little. The 2Y was 3.59% and the 10Y 3.75% as the 2s10s curve continued to steepen.
On the day ahead it's home sales and the 2Y auction.
XTOD: Chinese policy makers keep running into the issue that lower rates and more programs to lend to the private sector aren't the solution to a debt deleveraging. That's b/c it's not a supply or price of credit problem. Its an asset price & demand problem.
XTOD: A visualisation of why the fees you pay, matter: https://pbs.twimg.com/media/GYLcllYakAIgh9P?format=jpg&name=900x900
XTOD: "...just 86 stocks accounted for half of the total stock market wealth creation over this 90-year period...less than half of the stocks in the universe generated any returns for investors...only 42% earned more than risk-free Treasuries over the entire period...less than 4% of the thousands of stocks in this universe accounted for virtually all of the market gains. Harvey D Shapiro Henrik Bessembinder
@barronsonline . there are no words for how important this Shapiro essay is...
XTOD: Retirement starts when you stop sacrificing today for some imaginary tomorrow.
You retire by saving up enough money, becoming a monk, or by finding work that feels like play to you.
https://x.com/BobEUnlimited/status/1838164375795900628
https://x.com/KoyfinCharts/status/1838274141750989217
https://x.com/tomkeene/status/1838306615604449310
https://x.com/NavalismHQ/status/1837938164498886681
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