LimLS
2022-06-09

(TLDR : Fed hike/QT will continue its aggressive course regardless of Friday CPI)

8th day of sideway movement. Market is waiting for CPI numbers on Friday before making its move. Breaking upwards or breaking downwards, we do not know. But what I do know is that even if CPI number is slightly lower, meaning there is a "chance" that inflation had past its peak, Fed will still carry on with June/July of 0.5% hike each. 

Firstly, Fed look at few months of data before it can be convinced that inflation reached and come down from its peak. So just May CPI alone is not enough to make Fed changed its course. We also need June/Jul/Aug CPI data to convince Fed of any change of its current policy. 

Next, Fed current hike and QT is actually too small to effectively bring down inflation fast. Paul Volcker push interest rate from 11% to 20% during 1981 and brought down the inflation. Not saying current Fed need to push up so high but just saying inflation will not come down fast. So Fed tightening policy will be ongoing for longer than we may think. Food for thoughts for people who are looking at long term of the market. 

Sorry, this post has been deleted
Disclaimer: Investing carries risk. This is not financial advice. The above content should not be regarded as an offer, recommendation, or solicitation on acquiring or disposing of any financial products, any associated discussions, comments, or posts by author or other users should not be considered as such either. It is solely for general information purpose only, which does not consider your own investment objectives, financial situations or needs. TTM assumes no responsibility or warranty for the accuracy and completeness of the information, investors should do their own research and may seek professional advice before investing.

Comments

  • Remotecam
    2022-06-09
    Remotecam
    June and July Fed 50 point hikes is already priced in.  The fear is August & September! Will it continue hiking?
    • LimLS
      Next FOMC on Jun/Jul/Sept/Nov/Dec. Jun and Jul are most likely priced in. Current opinion is 60% chance of another 0.5 for Sept and 0.25 for Nov/Dec. Can't predict as situation is fluid and changing
  • BellaFaraday
    2022-06-12
    BellaFaraday
    The Fed is likely to raise interest rates by three-quarters of a percentage point in the coming months.
  • BurnellStella
    2022-06-12
    BurnellStella
    The CPI numbers are in, and they're horrible.
  • sugizoi4u
    2022-06-09
    sugizoi4u
    Thanks for the share
  • yeetmin76
    2022-06-09
    yeetmin76
    Thanks for sharing
  • SaveHK
    2022-06-09
    SaveHK
    nice thanks
Leave a comment