None of how the market is appearing at present in response to the dearth of a powerful 50 foundation level sign from Waller ought to be a shock.
Here’s what I wrote again in June:
It has been awhile since we have had a ‘regular’ fee chopping cycle so it is price a reminder about what occurs and what at all times occurs:
The market turns right into a whiny teenager. It begins kicking-and-screaming
for fee cuts, with equities bleeding on something that is not overtly
dovish.
For those who do not like that reference, then think about it like a toddler that desires a sweet. They at all times need extra and so they need it proper now. As the daddy of 4 younger children, there is no such thing as a pleasing them.
That is precisely how markets behaved in 2008, in 2016 when fee hikes got here too quickly and the way they behaved in the course of the taper tantrum. The episode in 2019 was barely much less as a result of Powell was seen as easing pre-emptively.
Fed funds goal fee historical past:
