Since Yellow-Yellen's March dovefest, stocks have rallied, China has stabilized, and while economic data has been weak in general – jobs and inflation (which is what The Fed claims to care about) have been positive. So how does The Fed make June a live meeting, tilt hawkish, and still protect the narrative of recovery and the sanctity of their equity market (which is all that really matters):
- FED REMOVES REFERENCE TO GLOBAL EVENTS POSING RISKS TO OUTLOOK
- FED SAYS LABOR MARKET IMPROVED EVEN AMID SIGNS OF SLOWER GROWTH
- FED REPEATS ECONOMIC SITUATION WARRANTS ONLY GRADUAL RATE HIKES
But… while "global risks" no longer figure and the Fed may be "data depedent" again as rate-hikes are back on the table, a key change emerges: instead of monitoring "inflation developments" the Fed is now "monitoring inflation indicators and global economic and financial developments" which is effectively the same as the struck language on "global economic and financial developments."
Some other notable observations: the Fed may have modestly downgraded domestic conditions by saying that "economic activity appears to have slowed" while household spending "moderated" from "has been increasing at moderate rate", and yet at the sasme time the Fed references "consumer sentiment" which "remains high" for the first time, while noting that "labor market conditions have improved further."
So the economy is slowing, but at least the hiring of waiters and bartenders continues.
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Pre-Fed: S&P Futs 2084, 10Y 1.888%, EUR 1.134, Oil $44.65, Gold $1249
Before today's statement, rate hike odds…
Since The Fed's Dovish-er than expected March meeting, Oil has been the big winner. Bonds & Bullion bounced off unchanged the last 2 days with stocks up 4%…
Let's hope they don't get too hawkish…
Additional headlines include:
- *FED SAYS HOUSING SECTOR IMPROVED FURTHER SINCE START OF YEAR
- *FED TO WATCH INFLATION, GLOBAL, FINANCIAL DEVELOPMENTS CLOSELY
- *FED: INFLATION BELOW TARGET DUE TO CHEAPER NON-ENERGY IMPORTS
- *FED SEES MODERATE GROWTH, STRENGTHENING LABOR MARKET AHEAD
- *FED REPEATS ECONOMIC SITUATION WARRANTS ONLY GRADUAL RATE HIKES
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Full Redline Below:
With 576 words, the statement was just fractionally longer than the March FOMC statement:
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