The "Turning" Point!

“Looking ahead, we are in a position to proceed carefully in determining the extent of additional policy firming that may be appropriate.”- Jerome Powell.

In a mind-boggling central bank action this week, three of the five largest Central Banks delivered their monetary policy.

As many participants call it, the Fed’s outcome was a “Hawkish pause”. Nonetheless, the FOMC came out with a mirage of projections (SEP) to warrant their Dot Plots, and bond markets obliged them by adjusting the future rate projections (2024).

For the first time, JayPo meticulously used the words “proceed carefully” multiple times, which indicates that we are now at the “turning point” in this tightening cycle.

Not only on the monetary policy front, but this week’s housing data in the US reaffirms my view about the turning point in the business cycle. (A deep dive later)

In the U.K., the BoE, in a close call (a split vote 5-4), riding against the consensus, decided to pause. We will dig deeper behind the BoE’s decision, but I have favoured a pivot in the U.K. for weeks now.

In the land of the rising sun, the contrarian central bank (BoJ) continued its ludicrous QQE and NIRP policy despite elevated inflationary pressures.

Let us dig deeper into what transpired in the monetary policies that led to the epic carnage in the worldwide bond markets.

Let’s go!

PS: There’s a time change! Your favourite newsletter will now be published at 11:30 AM EST / 16:30 PM BST / 8.30 AM PDT / 21:00 PM IST every Friday.