He who fights is not dead, but the exhausted Wall Street fought against the ropes. However, as the Fed renewed its best thanks, in the first place, hearing the word of Raphael Bostic, the president of Atlanta H, was enough to heal it. Or at least in appearances.
The Stock market jumped as a spring, when a regional official stated that he is “firmly” fighting on the part of those who defend a rise in rates “only” a quarter of a point in the next meeting of the institution; on the 21st and 22nd. The S&P500, which had already broken through the 50-wheel moving average and was balanced precariously at the 200-wheel moving average, rose 0.76% on Thursday and 1.61% on Friday. Thus he pursued a remarkable change in the critical matter.
Wall Street recovered even though rates continued to rise
Is H the knights coming to the rescue again? No. The rate hike saga continues. Destiny is not in dispute. What is being discussed is the size of the size: a quarter point or a half. It was resolved in January. The central bank has already chosen the path of expansion of the smallest size, so that the first step will leave the market, but the unexpected abundance of the real economy and inflation has forced a retracement. Other district presidents, such as James Bullard and Loretta Mester, took it upon themselves to remember their preaching for half of the adjustment. Defeated in the next meeting on the arguments of soft prices and activity, an unexpected burnout of the same variables that occurred in January, but only revealed last month, pre-elected them.
The economy created net jobs for more than half a million people. The unemployment rate has fallen to its lowest level since 1969. Inflation rose to 0.6% by the central bank’s estimate (and half of the consumer basket of that size or higher posted increases). Soft port? In January, he canceled the taxi on the track. It is a postcard of resonant acceleration and vertical takeoff. As Captain Waller explains, the hawk is as tenacious as it is surprising. The data debunked “my observation in January that we would make significant progress in controlling activity and reducing inflation.” Wall Street saw it that way too. And his high hopes were dashed in January by the blow of strong indications.
Bostic’s firm is committed to adhering to the policy of confidence in investors. It shows that H has to ensure an irreversible reduction of inflation and to this end arrange a quarter point hike this month and another month in May, and then leave short-term rates unchanged at 5.25% for a long time, at least until 2024. What he did not say – we must lose security and double our pledge. And that H can be satisfied “in the middle of the summer”, and “expectantly” retire as the Bank of Canada has already done, the spirits are still lower.
The real end of the saga could be as early as June. It is worth noting that it has a bostic voice, but in 2023, it does not express one party’s vote, while others seek a more expedient solution. Code cutter Jerome Powell will be speaking this week. The parties involved are not clear. But the last word will be the truth even so. The market may adhere to H terms, but the central bank is data-dependent. As Waller bluntly put it. If the index is controlled, it will support a bullish movement. If they do not, the lawyer will be charged extra 5.25%.
All agree on the essentials: inflation must be brought down to 2%. That the indices seem to be slowing down in February is the same case as flipping a coin. Chances are that over time, bureaucratic zeal, restrictive monetary policy, and increased credit will occur. We are no longer in 2022, when it started from a scratch and with an unusual delay after the price has been rushed. This is Bostic’s word.
Inflation has not yet hit the pocket, but it closes with both investments. Let not two arrive, but let not more be required. Then keep the terminal rate – at 5.50% Bullard asks; 5.75% risk Thomas Barkin -will complete the fire. But at the same time it will reduce the risk of causing an accident from overreaction. Buy an investment (in stocks and bonds) idea. At least until the truth does not deny.