I suggested that I'd be popping in regularly this week (while away), but up until this morning, while the news has come fast and furious, the market action -- generally positive -- hasn't inspired me to grab your attention.
This morning's release of February's producer price data turned what, in last night's futures action, looked to be a green open for equities (globally), quickly into a red one... Escalation, by way of threats out of Iran, of the Middle East conflict isn't of course helping, with oil up over 2% as I type.
Clearly the inflation data is doing a number on the market's expectations for what comes out of today's Federal Reserve meeting... The 2yr treasury note yield (a market proxy for Fed expectations) is up notably on the morning.
So, all eyes and ears will be on what J. Powell has to say during the post-meeting presser... While there will be a dissent or two/three among the voters (voting for a cut), there'll be no announced move in the fed funds rate today.
The question for markets being, is the Fed focusing on the inflationary impact of a supply shock in energy -- and thus thinking tighter policy is in order? Or, is it more concerned about the economic hit that heavy energy prices will levy onto a consumption driven economy?
I'm guessing that he'll stress that the risks are more or less balanced right here, and that they'll have to see how geopolitical things shake out, and how the data roll in.
If, instead, he comes across hawkish (inflation being the chief concern), markets, across the board (including precious metals) will hate it... If he comes across dovish (inclined to ease policy in fear of a slowing economy), markets (including precious metals) will love it.
A balanced view/message right here is the safe bet for the Fed.
Feeling good about our recent addition to cash (out of EM bonds), and about our overall positioning in light of the current global setup.
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