Not that unusual when they start raising the Fed funds rate it’s happened before. On the recession front at least the unemployment rate is holding steady and no inversion on the yield curve yet with the 30yr vs the 3mth. 10yr vs 2yr and the 10yr vs the 3mth. The closest is the 10yr 2yr with only a +0.06% difference. The CME is showing a 83% probability of a 75 basis pt increase at the July meeting. One thing for sure
the Fed is changing the math on everything so it will be interesting to see how this all plays out.
good post, thank you. I disagree that the Fed has no tools to combat energy and food prices. Their power is with raising rates which will suck money out of the economy thus eventually reducing prices. It will be painful for many americans. Credit card debt is rising right now as people try to keep up with inflation. Those chickens will come home to roost. Very good chance we are already in a recession and waiting for the numbers to confirm. Unemployment is going to increase, it is at an unhealthy low level right now, weird as that sounds, we need unemployment higher. The fiscal and monetary stimulus preceded the COVID by 7 years. It began with the Fed lowering rates to historic levels and got worse with the Qantitative Easing in 2013 which pumped trillions into the economy. It was just made worse in 2020 when trillions were printed to prevent an economic collapse. I wonder if stimmies would have been sent if it wasnt an election year. The damage was done in 2019 Q3 when the fed pussied out and started lowering rates again. Mistake. Housing is fucked right now and housing is the biggest economic engine . No soft landing is my prediction. The Fed MUST hold to their plan of raising rates no matter who screams. No pussying out like in Q3 2019 . Big Balls Fed.