No Jerome Pivot
No Jerome surprise, he is not going to pivot, but that is not the point. Underlying New Economy factors remain in place. Our underlying fundamental algo basket turned bullish this week, will let the short, big money fed follower group make their point today.
An update after watching everyone fall over themselves for the past three hours:
- First Let’s note that Powell’s biggest job is to bring down inflation and the primary way he is trying to do this is through rhetoric and raising the FED FUNDS rate.
- So what are the interest rate markets saying….my favorite calculation is to average all the interest rate pairs to see if there is any direction in interest rates. This is the chart of the calculation average of: (30 yr-10 yr)+(10 yr-05 yr)+(05 yr- 02 yr)+(02 yr- 03 mo).
What I see from this chart is that the directional thrust of the interest rate markets peaked on May 10, the start of the market bottom. Since then the direction has tended towards flatness with little sense of direction. Powell rhetoric talks about a 4.0 % Fed Funds rate, a resumption of direction, the market is not impressed.