In what many market participants call “Operation Say Nothing”, the busiest week in the Central Banks Universe was marked by CBs Ex-Japan “NOT” committing anything and dumping the forward guidance.
The data-dependent approach (also meeting by meeting approach), first popularized by Christian Lagarde, has now landed in the USA as JayPo refused to divulge the future rate hike details. The ECB did something intriguing apart from the expected 25 bps hike, which we will discuss later and is of paramount importance if followed by other “loss-making” CBs.
In the East, the BoJ did the long-awaited YCC tweak as political pressure builds on the “Contrarian Central Bank” to act. Furthermore, Chinese stimulus measures reaffirm the CCP’s “commitment” to induce growth and inflation in a languishing deflating Chinese economy.
Let’s understand the likely “Inflection” point in the global macro!
US!
We had the super-important FOMC meet.
As expected JayPo raised rates by 25 bps. The equity and bond markets were calm and didn’t react to the policy as the hike as the exuberant markets already priced in the “dovish” Fed.
The markets got the cheer from JayPo as he uttered the magical words of the “soft landing”.
“Not Using Term 'Optimism,' But There Is A Path to Soft Landing”: JayPo.
Furthermore, he also indicated that the Fed staff is no longer anticipating a recession. Well, it seems that the “Fairytale Landing” has seeped into the minds of Fed staff as well.
Moving forward, one of the statements that hit me hard was JayPo’s words:
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