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Fed funds rate +50 bps to 4.25-4.50%; (bank) reserve balance rate 4.4%; primary (discount) rate 4.5%. More rate hikes should be expected. Rates will remain higher for longer & rate cuts in 2023 are unlikely (despite the fed fund futures markets projecting so). The QT remains at -$60 billion/mo for Treasuries, -$35 billion/mo for MBS. New economic projections were released.
The jobs market is strong & labor-participation rate is low. Layoffs are restricted to techs now. The labor market may weaken by late-2023.
Housing prices have weakened. But housing contribution to CPI via rents/OERs will continue to go up and may start to go down only in late-2023. Services remain strong. Goods prices have come down. The Russia-Ukraine war has caused higher energy & food prices. Despite trending lower, the inflation remains too high vs +2% average target (it will not be changing). The inflation-expectations remain subdued.
The GDP growth will slow but is expected to remain positive. Soft-landing is still possible, or a shallow recession. Financial conditions & credit markets have tightened. Longer term rates have come down. Stocks have been up. China reopening may not have an immediate net effect.
In this environment we can expect almost anything that you can imagine. Much better to just check reliable sources daily for what is happening rather than to rely on "expectations".
Comments
Fed funds rate +50 bps to 4.25-4.50%; (bank) reserve balance rate 4.4%; primary (discount) rate 4.5%. More rate hikes should be expected. Rates will remain higher for longer & rate cuts in 2023 are unlikely (despite the fed fund futures markets projecting so). The QT remains at -$60 billion/mo for Treasuries, -$35 billion/mo for MBS. New economic projections were released.
The jobs market is strong & labor-participation rate is low. Layoffs are restricted to techs now. The labor market may weaken by late-2023.
Housing prices have weakened. But housing contribution to CPI via rents/OERs will continue to go up and may start to go down only in late-2023. Services remain strong. Goods prices have come down. The Russia-Ukraine war has caused higher energy & food prices. Despite trending lower, the inflation remains too high vs +2% average target (it will not be changing). The inflation-expectations remain subdued.
The GDP growth will slow but is expected to remain positive. Soft-landing is still possible, or a shallow recession. Financial conditions & credit markets have tightened. Longer term rates have come down. Stocks have been up. China reopening may not have an immediate net effect.
https://ybbpersonalfinance.proboards.com/thread/158/fomc-statements-6-7-weeks?page=2&scrollTo=867
Thanks for the summary.
https://home.treasury.gov/resource-center/data-chart-center/interest-rates/TextView?type=daily_treasury_yield_curve&field_tdr_date_value_month=202212
https://home.treasury.gov/resource-center/data-chart-center/interest-rates/TextView?type=daily_treasury_real_yield_curve&field_tdr_date_value_month=202212
CME FedWatch is meaningless today. It should be OK tomorrow.