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Bloomberg Audio Studios, podcasts, radio.

News, the Chairman of the Federal Reserve to rump out, wrapping up the June FED decision. No change at the Federal Reserve to interest rates, Plenty of changes in the forecast. Inflation moving up a little bit, the dot plot moving down a little bit. Equity market is just about holding onto gains and still near all time highs on the S and P five hundred on the NASDAK we're still highed by one point eight percent, the rustle up by two point two. We turn the page and switch at the board and get to the bond market. This is where things start to get. Interestings we're down by double digits at the front end throughout most of the morning and into the afternoon. We're now down by only nine on a two year at four seventy four fifty five. And if you take an inter day chart of the two year yield, this shows the story of the morning and the afternoon perfectly. I want to show you three moves. The first move was eight thirty Eastern time this morning when CPI came out cooler that expected what you see on yields drop easy to see on the far right side of the chart. Two moves I want to points out once at two pm. Another is in the news conference at two pm. We had some forecasts. The dot plot came out and we all wanted to know where the median dot would be in March. It signored or at least implied three cuts for twenty twenty four. That came down to one. You'll started to climb, and then we all had a big question going into the news conference. We'll hang on a minute. Did they factor in the inflation report that came out this morning? And obviously, inevitably Chairman Power was asked about it. This is what he had to say.

News, the Chairman of the Federal Reserve to rump out, wrapping up the June FED decision. No change at the Federal Reserve to interest rates, Plenty of changes in the forecast. Inflation moving up a little bit, the dot plot moving down a little bit. Equity market is just about holding onto gains and still near all time highs on the S and P five hundred on the NASDAK we're still highed by one point eight percent, the rustle up by two point two. We turn the page and switch at the board and get to the bond market. This is where things start to get. Interestings we're down by double digits at the front end throughout most of the morning and into the afternoon. We're now down by only nine on a two year at four seventy four fifty five. And if you take an inter day chart of the two year yield, this shows the story of the morning and the afternoon perfectly. I want to show you three moves. The first move was eight thirty Eastern time this morning when CPI came out cooler that expected what you see on yields drop easy to see on the far right side of the chart. Two moves I want to points out once at two pm. Another is in the news conference at two pm. We had some forecasts. The dot plot came out and we all wanted to know where the median dot would be in March. It signored or at least implied three cuts for twenty twenty four. That came down to one. You'll started to climb, and then we all had a big question going into the news conference. We'll hang on a minute. Did they factor in the inflation report that came out this morning? And obviously, inevitably Chairman Power was asked about it. This is what he had to say.

What's in the SEP actually does reflect the data that we got today to the extent you can, you know, reflect it in one day. I think, well, you know, you will see PPI tomorrow. Will know more about the PCEE reading as the month goes on, but the initial CPI reading and it's you know, kind of first level translation to pce we did have this morning. We were briefed about it and people were able to consider whether they should make changes, and.

What's in the SEP actually does reflect the data that we got today to the extent you can, you know, reflect it in one day. I think, well, you know, you will see PPI tomorrow. Will know more about the PCEE reading as the month goes on, but the initial CPI reading and it's you know, kind of first level translation to pce we did have this morning. We were briefed about it and people were able to consider whether they should make changes, and.

It didn't look like many people made any changes at least, and for that reason, that's why you see that spike car that little move high again on a two year yield que The confusion around the forecasts, well, is this.

It didn't look like many people made any changes at least, and for that reason, that's why you see that spike car that little move high again on a two year yield que The confusion around the forecasts, well, is this.

By design in some levels? Basically, there were a number of Fed officials who got that CPI print and opted not to change their inflation forecast. Do they do so because they want more than three inflation reads to really gain confidence in some sort of disinflationary trend? Is it because all things being equal, it's better to send a hawkish signal to markets that are eagerly looking for any opening to buy into any idea of a rate cut. All we know is that that was a slight disappointment that's being reflected in slightly higher yields that have taken back about five basis points from earlier this morning.

By design in some levels? Basically, there were a number of Fed officials who got that CPI print and opted not to change their inflation forecast. Do they do so because they want more than three inflation reads to really gain confidence in some sort of disinflationary trend? Is it because all things being equal, it's better to send a hawkish signal to markets that are eagerly looking for any opening to buy into any idea of a rate cut. All we know is that that was a slight disappointment that's being reflected in slightly higher yields that have taken back about five basis points from earlier this morning.

There's always going to be a big conversation about where the medium dot is. But when these numbers came out, you were the first to point this out. The split amongst the policy makers now swear TK Just to go through this again for those of you just joining us, this is what we saw get away from the media on the committee right now. The dot plot shows four policy makers who saw no cuts this year, some anticipated just one reduction, that was seven and expected tom two cuts. The Federal Reserve is kind of all over the place.

There's always going to be a big conversation about where the medium dot is. But when these numbers came out, you were the first to point this out. The split amongst the policy makers now swear TK Just to go through this again for those of you just joining us, this is what we saw get away from the media on the committee right now. The dot plot shows four policy makers who saw no cuts this year, some anticipated just one reduction, that was seven and expected tom two cuts. The Federal Reserve is kind of all over the place.

Created and what's important here is the dispersion is not smooth. So there's basically two camps. I thought Lukawa, of all people, had a wonderful tweet out and that's really pointing out the polarity that we see in the Fed as we staggered through the summer.

Created and what's important here is the dispersion is not smooth. So there's basically two camps. I thought Lukawa, of all people, had a wonderful tweet out and that's really pointing out the polarity that we see in the Fed as we staggered through the summer.

I want to pick up on the labor market and talk a little bit about that. So on Friday, payrolls came in and it looked really hot on the headline number two seventy two. But there's two surveys that go into payrolls. There's the Establishment survey payrolls. There's the household survey that's the unemployment rate. Unemployment came up to about four percent. We all wanted to know what weight would shairman Power put on the headline figure and how much weight would he put on the household survey, and it kind of said something like this, Sometimes it's difficult to reconcile the differences. Payrolls might be a little bit overstated. Makes more sense to look at things over the last six months or so, Lisa. Overall, the picture is strong, and we've got a gradually calling labor market.

I want to pick up on the labor market and talk a little bit about that. So on Friday, payrolls came in and it looked really hot on the headline number two seventy two. But there's two surveys that go into payrolls. There's the Establishment survey payrolls. There's the household survey that's the unemployment rate. Unemployment came up to about four percent. We all wanted to know what weight would shairman Power put on the headline figure and how much weight would he put on the household survey, and it kind of said something like this, Sometimes it's difficult to reconcile the differences. Payrolls might be a little bit overstated. Makes more sense to look at things over the last six months or so, Lisa. Overall, the picture is strong, and we've got a gradually calling labor market.

People really honed it on the idea that the payroll jobs growth maybe overstated. That line caught a lot of people's attention at a time where he reflected the confusion that we all felt, which is the reason why some people said, we don't believe these numbers. Will wait for the revisions. Nonetheless, this is why he's talking about a series of data points, and maybe is part of the reason why they aren't having much conviction, because this is just sheer confusion that we're feeling from the feed.

People really honed it on the idea that the payroll jobs growth maybe overstated. That line caught a lot of people's attention at a time where he reflected the confusion that we all felt, which is the reason why some people said, we don't believe these numbers. Will wait for the revisions. Nonetheless, this is why he's talking about a series of data points, and maybe is part of the reason why they aren't having much conviction, because this is just sheer confusion that we're feeling from the feed.

Do you remember when Dan Swank used to talk about aspirational forecasts of the FETA reserve. Let's have a look at unemployment together. Four percent on Friday. This is where they see it. Year end medium projection four percent, year end twenty four four point two percent, year end twenty five at LISA year end twenty twenty six, four point one percent. Now, I understand the Fetter Reserve has a great influence on things. They can shape the events they anticipate. If they start to signal the unemployment's kind of five percent, we've got a problem, and I think you see the market freak out. But to signal, based on your own projections, that we finish basically flat from where we are unemployment by year end and climb to four point two by twenty twenty five, is that aspirational or realistic?

Do you remember when Dan Swank used to talk about aspirational forecasts of the FETA reserve. Let's have a look at unemployment together. Four percent on Friday. This is where they see it. Year end medium projection four percent, year end twenty four four point two percent, year end twenty five at LISA year end twenty twenty six, four point one percent. Now, I understand the Fetter Reserve has a great influence on things. They can shape the events they anticipate. If they start to signal the unemployment's kind of five percent, we've got a problem, and I think you see the market freak out. But to signal, based on your own projections, that we finish basically flat from where we are unemployment by year end and climb to four point two by twenty twenty five, is that aspirational or realistic?

You know, we said a lot of their projections were aspirational a year or two years ago, and yet they were correct. So I'm humble to sit here and say that they're just purely aspirational. And we have not seen the unemployment rate climb to such a significant degree, and they've actually had to decrease their expectation for unemployment rates just simply because the labor market was stronger than they expected. Now, I would argue that the idea of upgrading their expectation for inflation and keeping the same number of cuts, just pushing them back to a later time raises some questions, And this was ask the press conference. How did they accept that, given that they don't see the labor market breaking and that they want to get back down to two percent, how do we cross how do we thread that needle? And that's a good question that I didn't really hear an answer to.

You know, we said a lot of their projections were aspirational a year or two years ago, and yet they were correct. So I'm humble to sit here and say that they're just purely aspirational. And we have not seen the unemployment rate climb to such a significant degree, and they've actually had to decrease their expectation for unemployment rates just simply because the labor market was stronger than they expected. Now, I would argue that the idea of upgrading their expectation for inflation and keeping the same number of cuts, just pushing them back to a later time raises some questions, And this was ask the press conference. How did they accept that, given that they don't see the labor market breaking and that they want to get back down to two percent, how do we cross how do we thread that needle? And that's a good question that I didn't really hear an answer to.

You want McKays run out of the news conference and got in front of the camera for us, Mike, let's catch out with you, Chairman Pow. Did he manage to square the circle in that news conference?

You want McKays run out of the news conference and got in front of the camera for us, Mike, let's catch out with you, Chairman Pow. Did he manage to square the circle in that news conference?

Not really, John. I was thinking during this of the line from the old movie Blazing Chaddles where the preacher says, you're on your own boys, because there doesn't seem to be any kind of direction here from the FED about which way they're going to go and when they're still base their base cases. I mentioned in my question to the chairman is that they're going to cut rates this year, but they don't see any difference at the end of the year between the economy now and the economy then. So how are investors supposed to anticipate what the FED is going to do if the FED doesn't know and can't give you any guideposts. The Chairman said, well, we need a couple more reports that show things improving, but what is improvement? Last month we saw the CPI changed by about a tenth of a point and the PCE changed by about a tenth of a point, and Chris Waller said, well that's not good enough. I give those reports a C plus. So it's really hard to tell what's going to move them Obviously he's sort of signaling not July, but from September on. It's an open question.

Not really, John. I was thinking during this of the line from the old movie Blazing Chaddles where the preacher says, you're on your own boys, because there doesn't seem to be any kind of direction here from the FED about which way they're going to go and when they're still base their base cases. I mentioned in my question to the chairman is that they're going to cut rates this year, but they don't see any difference at the end of the year between the economy now and the economy then. So how are investors supposed to anticipate what the FED is going to do if the FED doesn't know and can't give you any guideposts. The Chairman said, well, we need a couple more reports that show things improving, but what is improvement? Last month we saw the CPI changed by about a tenth of a point and the PCE changed by about a tenth of a point, and Chris Waller said, well that's not good enough. I give those reports a C plus. So it's really hard to tell what's going to move them Obviously he's sort of signaling not July, but from September on. It's an open question.

Mike. They want the convenience of a dramatic ex post decision. Maybe that's not what the way the script goes this time. What will you watch in the data that allows them to get out front is they've never done before, well maybe the nineties, but basically that they've never done before.

Mike. They want the convenience of a dramatic ex post decision. Maybe that's not what the way the script goes this time. What will you watch in the data that allows them to get out front is they've never done before, well maybe the nineties, but basically that they've never done before.

Well, basically you want to see what they want to see an improvement in inflation data. But how much is going to be the tricky part. We'll have to watch both what the market reaction is and what the data show, and then what they say in their speeches. At the same time, we will also be looking at the unemployment rate and job creation to make sure things don't go south there. Either one might push them one direction or another. I think that at this point they're going to be as cautious as possible, but they do seem determined to get at least one cut in.

Well, basically you want to see what they want to see an improvement in inflation data. But how much is going to be the tricky part. We'll have to watch both what the market reaction is and what the data show, and then what they say in their speeches. At the same time, we will also be looking at the unemployment rate and job creation to make sure things don't go south there. Either one might push them one direction or another. I think that at this point they're going to be as cautious as possible, but they do seem determined to get at least one cut in.

Mikeel A lot of people were asking, including both Muhammada and Bob Michael, whether the finficials really under stood the CPI data and kept their projections. We got kind of an answer but Sima Sha put it this way. You know, if they did know that, maybe that implies that they need more than three months of softer inflation prints before they can be convinced to cut rates. Do we have any clear message from the idea that yes, FED officials had the information, and yes they had the chance to change their forecasts, and no they did not.

Mikeel A lot of people were asking, including both Muhammada and Bob Michael, whether the finficials really under stood the CPI data and kept their projections. We got kind of an answer but Sima Sha put it this way. You know, if they did know that, maybe that implies that they need more than three months of softer inflation prints before they can be convinced to cut rates. Do we have any clear message from the idea that yes, FED officials had the information, and yes they had the chance to change their forecasts, and no they did not.

Do it.

Do it.

Well.

Well.

The chairman suggested that some people may have changed their forecast, but the majority didn't. It's not going to be extending the number of inflation data that they get. It's going to be more of the same that we saw today. Doesn't have to be maybe the same magnitude, but it has to be a continued sequence of slowing inflation for them to gain confidence. That's their magic word is confidence. And they don't tell us what would give them confidence, but it seems like several more, one or two more maybe would give them the confidence that they could start moving towards cutting rates.

The chairman suggested that some people may have changed their forecast, but the majority didn't. It's not going to be extending the number of inflation data that they get. It's going to be more of the same that we saw today. Doesn't have to be maybe the same magnitude, but it has to be a continued sequence of slowing inflation for them to gain confidence. That's their magic word is confidence. And they don't tell us what would give them confidence, but it seems like several more, one or two more maybe would give them the confidence that they could start moving towards cutting rates.

Mike, you're expert at the data far more than i am. If you look at domestic final sales, take out the noise of trade, the world's agony, etc. If you look at domestic final sales, what's the run rate? On the economy that they're going to be dealing with to July thirty one, September eighteenth, and near the election November seventh, well, we.

Mike, you're expert at the data far more than i am. If you look at domestic final sales, take out the noise of trade, the world's agony, etc. If you look at domestic final sales, what's the run rate? On the economy that they're going to be dealing with to July thirty one, September eighteenth, and near the election November seventh, well, we.

Were still in that area. Tom two point eight percent in the first quarter, still well above trend growth for that and the Atlanta Fed GDP now is running above three percent. If you take that one and you take the first quarter GDP at average them, you're at two point two percent for the first half. So they're going to be dealing with and they predict they're going to be dealing with an economy that doesn't slow down at this point and doesn't affect the labor market at this point. And the interesting thing is they see core PCE inflation going up, but they're still talking about raising rates or cutting rates rather. So it's it's a situation that kind of leaves everybody at sea here as to what it is they're actually going to do. If they want to advertised, listen to our speeches. This is a good advertisement for that.

Were still in that area. Tom two point eight percent in the first quarter, still well above trend growth for that and the Atlanta Fed GDP now is running above three percent. If you take that one and you take the first quarter GDP at average them, you're at two point two percent for the first half. So they're going to be dealing with and they predict they're going to be dealing with an economy that doesn't slow down at this point and doesn't affect the labor market at this point. And the interesting thing is they see core PCE inflation going up, but they're still talking about raising rates or cutting rates rather. So it's it's a situation that kind of leaves everybody at sea here as to what it is they're actually going to do. If they want to advertised, listen to our speeches. This is a good advertisement for that.

Yeah, Mike, I'm not sure if that one bites. Let's say, if that works. Mike McKay, thank you, sir, great work As always in the news conference. Once again, this is the calendar for the next month or so. So July fifth, you get another jobs report. Let's see if it looked like the one we got on Friday, July eleventh. You've get a CPI report back end of July, very last day of the month, July thirty one, another Federal Reserve decision. No questions really about July, Lisa, but I guess it was implied based on the forecast we got a little bit earlier.

Yeah, Mike, I'm not sure if that one bites. Let's say, if that works. Mike McKay, thank you, sir, great work As always in the news conference. Once again, this is the calendar for the next month or so. So July fifth, you get another jobs report. Let's see if it looked like the one we got on Friday, July eleventh. You've get a CPI report back end of July, very last day of the month, July thirty one, another Federal Reserve decision. No questions really about July, Lisa, but I guess it was implied based on the forecast we got a little bit earlier.

Basically, it seems like July is squarely off the table. It was not even an consideration September though. J. Pewell didn't even entertain that idea. He kind of hemmed, in hard, I don't want to talk about timeframes. I don't we don't want to be like, you know, squirred in give it.

Basically, it seems like July is squarely off the table. It was not even an consideration September though. J. Pewell didn't even entertain that idea. He kind of hemmed, in hard, I don't want to talk about timeframes. I don't we don't want to be like, you know, squirred in give it.

I would have a suppression of it.

I would have a suppression of it.

Well, I meaning again, honestly, that was exactly what he needed to do, right, Wasn't that kind of the goal that Bob Michael set out for him was to do nothing? I mean, if anything, he had the most hawkish message relative to market expectations.

Well, I meaning again, honestly, that was exactly what he needed to do, right, Wasn't that kind of the goal that Bob Michael set out for him was to do nothing? I mean, if anything, he had the most hawkish message relative to market expectations.

In a long time.

In a long time.

So it was somewhat of a different Ja Powell than we've gotten in the past. But you know, he wouldn't really solidify anything, and that I think was by design given their confusion.

So it was somewhat of a different Ja Powell than we've gotten in the past. But you know, he wouldn't really solidify anything, and that I think was by design given their confusion.

I think emphasis really matters in news conferences. Of course it matters. It's pretty straightforward. It's where he didn't put the emphasis. He didn't really put much emphasis on the forecast for economic growth, on employment or inflation. Where he actually put emphasis was on the destination for the FED dots. And I thought it was pretty interesting. So we were all sort of geared up to focus on twenty twenty four. Would the dot plot, the median dot come down from three to two, maybe to one? It comes down to one, but then you're looking out to twenty twenty five and they give you one back, so they take two away and then throw an extra one in in twenty twenty five. So really, today, when you look at the dot plot the OTTOMN destination, what's changed for the FMC incens to topoth the rights from Haya.

I think emphasis really matters in news conferences. Of course it matters. It's pretty straightforward. It's where he didn't put the emphasis. He didn't really put much emphasis on the forecast for economic growth, on employment or inflation. Where he actually put emphasis was on the destination for the FED dots. And I thought it was pretty interesting. So we were all sort of geared up to focus on twenty twenty four. Would the dot plot, the median dot come down from three to two, maybe to one? It comes down to one, but then you're looking out to twenty twenty five and they give you one back, so they take two away and then throw an extra one in in twenty twenty five. So really, today, when you look at the dot plot the OTTOMN destination, what's changed for the FMC incens to topoth the rights from Haya.

Basically that just the disinflationary trend is happening more slowly than they previously thought, but that at some point they will have this same trajectory, just on a delayed timeframe. And that was essentially what Ja Powell laid out today and maybe on the margins that's a bit more hawkish than the two year was pricing them before.

Basically that just the disinflationary trend is happening more slowly than they previously thought, but that at some point they will have this same trajectory, just on a delayed timeframe. And that was essentially what Ja Powell laid out today and maybe on the margins that's a bit more hawkish than the two year was pricing them before.

I'm going to go to modest further progress. Modest is on the yactis. I have no idea what it means. Further in progress, John, is exactly what you were talking about, which is what they're doing here, is they're extending out the optionality of their timeline. Their ex exis. Because your point, Lisa, this disinflation. It is slower. David Rosenberg not the next Rosenberg. David Rosenberg says eureka. But what they did today was extend out the X axis with further progress. That's not in any textbooks. That's marketing bologney.

I'm going to go to modest further progress. Modest is on the yactis. I have no idea what it means. Further in progress, John, is exactly what you were talking about, which is what they're doing here, is they're extending out the optionality of their timeline. Their ex exis. Because your point, Lisa, this disinflation. It is slower. David Rosenberg not the next Rosenberg. David Rosenberg says eureka. But what they did today was extend out the X axis with further progress. That's not in any textbooks. That's marketing bologney.

As far as i'm we can get to Jeff Rosenberg right now as Blackrock, Jeff want to put a catch up with you, sir. Let's get into it. How did you make these forecasts? And can you square the circle for us?

As far as i'm we can get to Jeff Rosenberg right now as Blackrock, Jeff want to put a catch up with you, sir. Let's get into it. How did you make these forecasts? And can you square the circle for us?

You know, I agree with Lisa, it's a little bit hard to square the circle here from the press conference. I mean, obviously, the morning's data set the tone for a very douvish press conference, and the one hike Median kind of took the wind out of the sails and so the so Powell was kind of faced with that as the as the backdrop, and so it was maybe a little bit less of the dubbish Powell than we've seen in the past. But I think he did give us a couple of insights. One, he did talk about the overstatement argument on payrolls, you know, a little bit to last week's data.

You know, I agree with Lisa, it's a little bit hard to square the circle here from the press conference. I mean, obviously, the morning's data set the tone for a very douvish press conference, and the one hike Median kind of took the wind out of the sails and so the so Powell was kind of faced with that as the as the backdrop, and so it was maybe a little bit less of the dubbish Powell than we've seen in the past. But I think he did give us a couple of insights. One, he did talk about the overstatement argument on payrolls, you know, a little bit to last week's data.

Two, you know, he talked about two point six two point.

Two, you know, he talked about two point six two point.

Seven as being I can't remember exactly the quote a fine place to be. And I think that does reveal that this is a FED that doesn't have to get to two percent anytime soon, and that's part of this asymmetric response function. If inflation is a little bit too hot, then we'll just hold pat and if there's weak in the labor markets or any kind of unexpected weakening, then we're going to cut, and we'll cut more aggressively. And so I think they're comfortable with this path of inflation. And then I think on the third point, there's just a bit of confusion about how stale are the SEP forecast relative to the new information from the morning. I think what is clear here is that having.

Seven as being I can't remember exactly the quote a fine place to be. And I think that does reveal that this is a FED that doesn't have to get to two percent anytime soon, and that's part of this asymmetric response function. If inflation is a little bit too hot, then we'll just hold pat and if there's weak in the labor markets or any kind of unexpected weakening, then we're going to cut, and we'll cut more aggressively. And so I think they're comfortable with this path of inflation. And then I think on the third point, there's just a bit of confusion about how stale are the SEP forecast relative to the new information from the morning. I think what is clear here is that having.

Been a little bit burned by.

Been a little bit burned by.

The enthusiasm at the end of last year and then the reversal on inflation. They're not going to want to reverse so quickly with just one good print, and he stated again and again they'll need more than just one. And I think that's why you had maybe the hesitancy. But understand that the difference between two cut and one cut.

The enthusiasm at the end of last year and then the reversal on inflation. They're not going to want to reverse so quickly with just one good print, and he stated again and again they'll need more than just one. And I think that's why you had maybe the hesitancy. But understand that the difference between two cut and one cut.

Median is one member. This is a very fine.

Median is one member. This is a very fine.

Point to be seeing, you know, pretty big shifts in market pricing. I think the broader theme here is this is still a FED that is looking to cut rates, very supportive to financial markets. Obviously the data this morning is portive to that, a little bit dismissive about the strength of the labor market. So I think this is a pretty good set up here for bonds and stocks.

Point to be seeing, you know, pretty big shifts in market pricing. I think the broader theme here is this is still a FED that is looking to cut rates, very supportive to financial markets. Obviously the data this morning is portive to that, a little bit dismissive about the strength of the labor market. So I think this is a pretty good set up here for bonds and stocks.

Does this mean in your view that September is still very much on the table, even if Fetcher Powell really demurred when it came to a timeframe.

Does this mean in your view that September is still very much on the table, even if Fetcher Powell really demurred when it came to a timeframe.

I do think it is.

I do think it is.

And I think obviously you know, this is the volatility that is what happens when the data lights the way, when you're when you're completely abandoning forecast based policy for data dependents. But if we do get in the interim period between now and September.

And I think obviously you know, this is the volatility that is what happens when the data lights the way, when you're when you're completely abandoning forecast based policy for data dependents. But if we do get in the interim period between now and September.

Reports that are along the lines.

Reports that are along the lines.

We don't have to get as big of a downside surprise as inflation as we've seen, but that continued gradual rebalancing in the labor market stabilization to slowing on the inflation side, then I think absolutely September is in play as well as December and the two cuts that are you know, not in the median, but I think are still very much in play here.

We don't have to get as big of a downside surprise as inflation as we've seen, but that continued gradual rebalancing in the labor market stabilization to slowing on the inflation side, then I think absolutely September is in play as well as December and the two cuts that are you know, not in the median, but I think are still very much in play here.

Jeff.

Jeff.

When he stepped off the stage, we were up two point any standard deviations on both SPX and Nasdaq one hundred. We've pulled back a little bit from their selling into the excitement tomorrow morning. I guess, Jeff Rozenberg, simple, how do you invest in this? Do you just clip a coupon? Do you increase your cash level in this uncertainty? Is there an opportunity?

When he stepped off the stage, we were up two point any standard deviations on both SPX and Nasdaq one hundred. We've pulled back a little bit from their selling into the excitement tomorrow morning. I guess, Jeff Rozenberg, simple, how do you invest in this? Do you just clip a coupon? Do you increase your cash level in this uncertainty? Is there an opportunity?

Well?

Well?

I think, as I mentioned, the opportunity here is that this is a FED that is very asymmetric, and they're asymmetric with regards to holding policy flat in the face of disappointing data in terms of strength or policy progress on inflation, and then very supportive on unexpected weakening in the labor market. I think that's very supportive to financial market conditions. I think there's a longer run you know, problem with that potentially, but in the short run, this is a little bit more favorable to risk markets and to risk taking. You can step out of cash into that front end of the curve. This is a fed that's telling you that they're going to cut rates. So cash has been very supportive because they've held rates up. But the path going forward, and Jonathan mentioned it, you know, this is just shifting the cuts into twenty twenty five, So you're going to lose the income by hanging out in cash. The belly of the curve for fixed income investors, the front belly of the curve two to five year apart.

I think, as I mentioned, the opportunity here is that this is a FED that is very asymmetric, and they're asymmetric with regards to holding policy flat in the face of disappointing data in terms of strength or policy progress on inflation, and then very supportive on unexpected weakening in the labor market. I think that's very supportive to financial market conditions. I think there's a longer run you know, problem with that potentially, but in the short run, this is a little bit more favorable to risk markets and to risk taking. You can step out of cash into that front end of the curve. This is a fed that's telling you that they're going to cut rates. So cash has been very supportive because they've held rates up. But the path going forward, and Jonathan mentioned it, you know, this is just shifting the cuts into twenty twenty five, So you're going to lose the income by hanging out in cash. The belly of the curve for fixed income investors, the front belly of the curve two to five year apart.

I think that's a very attractive part of the curve.

I think that's a very attractive part of the curve.

I do think you have to start moving out into that part of the curve to lock in those rates. And the economy to the comments on Mike McKee GDP, now the forecasting you know above trend growth relative to the fears of recession, this is a very supportive in market market environment for credit. That's a carry argument. I think you can clip coupon there, take some risk there because the default risk is still very much low because the growth side of the economy.

I do think you have to start moving out into that part of the curve to lock in those rates. And the economy to the comments on Mike McKee GDP, now the forecasting you know above trend growth relative to the fears of recession, this is a very supportive in market market environment for credit. That's a carry argument. I think you can clip coupon there, take some risk there because the default risk is still very much low because the growth side of the economy.

Is very strong.

Is very strong.

Jeff, stay close. I get you back in in just a moment. I want to talk about twenty five by talking about twenty four. There's four meetings left this year July thirty one, September eighteen, November seventh, December eighteenth. I want to go to the November mating. November fifth is an election. The day after they kick off a FED mating. Michael McKay, we're all talking about folksts for twenty twenty five. None of us are got a clau halfway about what twenty twenty five is going to look like.

Jeff, stay close. I get you back in in just a moment. I want to talk about twenty five by talking about twenty four. There's four meetings left this year July thirty one, September eighteen, November seventh, December eighteenth. I want to go to the November mating. November fifth is an election. The day after they kick off a FED mating. Michael McKay, we're all talking about folksts for twenty twenty five. None of us are got a clau halfway about what twenty twenty five is going to look like.

Well, you take a look at the dot plot for twenty twenty five, and compared to twenty twenty four, it's very very spread out. There is no consensus at all. We pick a median for convenience and talk about it and we say, Okay, they're putting us up to four rate cuts next year. But really, what the dot plot is telling you is they have no idea. And one of the reasons is we could have a completely different fiscal policy next year, and we have a lot of issues including debt ceiling, the government funding and the tax cuts that are going to expire that could change the economic picture tremendously. So I'm not going to tell Jeff Rosenberg how to trade that, but I don't think you can have a whole lot of confidence that what their predict today is going to be anything like what we'll be seeing at the November meeting.

Well, you take a look at the dot plot for twenty twenty five, and compared to twenty twenty four, it's very very spread out. There is no consensus at all. We pick a median for convenience and talk about it and we say, Okay, they're putting us up to four rate cuts next year. But really, what the dot plot is telling you is they have no idea. And one of the reasons is we could have a completely different fiscal policy next year, and we have a lot of issues including debt ceiling, the government funding and the tax cuts that are going to expire that could change the economic picture tremendously. So I'm not going to tell Jeff Rosenberg how to trade that, but I don't think you can have a whole lot of confidence that what their predict today is going to be anything like what we'll be seeing at the November meeting.

Am im kay, thank you sir. Of course, the forecasts are always more instructive to really gage the reaction function. That's what's important here, how they respond to incoming information. But let's just run with this, the forecast for twenty twenty five, Brami, what are they worth given how much could change in November onwards.

Am im kay, thank you sir. Of course, the forecasts are always more instructive to really gage the reaction function. That's what's important here, how they respond to incoming information. But let's just run with this, the forecast for twenty twenty five, Brami, what are they worth given how much could change in November onwards.

Well, this is the reason why Bob Michael said I'm in charge here. I'm a bond Micael investor, and I'm the person who sets the rates right now, not the Federal Reserve at a time where they are just as confused as ever before. I am curious, Jeff, what is your take on that that right now we see big bond investors saying we're setting rates, the Fed is a bunch of confused people who are looking at the same data and equally confuses everybody else. We can look at supply and demand. We can react to all of the economic data. Sure, yields jump up and down, but we're the ones that are kind of the main guy in the room.

Well, this is the reason why Bob Michael said I'm in charge here. I'm a bond Micael investor, and I'm the person who sets the rates right now, not the Federal Reserve at a time where they are just as confused as ever before. I am curious, Jeff, what is your take on that that right now we see big bond investors saying we're setting rates, the Fed is a bunch of confused people who are looking at the same data and equally confuses everybody else. We can look at supply and demand. We can react to all of the economic data. Sure, yields jump up and down, but we're the ones that are kind of the main guy in the room.

You know, I'm going to agree with Bob Michael very much so, especially when we're talking about the back end maturities and the term premium. You know, this is a FED that's gonna get less into the business of setting term premium and influencing the maturity of rates and the difference between demand and supply. Particularly as Mike McKee was just mentioning, we're gonna have a big issue around fiscal deficits in their financing, and much more of that is gonna be borne by us, the bond market, investors, the private sector, so a lot more of that term premium and then resetting that term premium is gonna be dictated by financial markets. It's partly why I think the front end of the curve is a bit more attractive because the term premium, you're going into that uncertainty with relatively low yes we're off the historical lows, but relatively low compensation for both term and inflation premium. I think that makes the back end a lot more challenging, and because we view it as more challenging, there's less demand, you're gonna have more supply. I think that could be a factor towards a little bit longer run process of steepening out both term and inflation premium.

You know, I'm going to agree with Bob Michael very much so, especially when we're talking about the back end maturities and the term premium. You know, this is a FED that's gonna get less into the business of setting term premium and influencing the maturity of rates and the difference between demand and supply. Particularly as Mike McKee was just mentioning, we're gonna have a big issue around fiscal deficits in their financing, and much more of that is gonna be borne by us, the bond market, investors, the private sector, so a lot more of that term premium and then resetting that term premium is gonna be dictated by financial markets. It's partly why I think the front end of the curve is a bit more attractive because the term premium, you're going into that uncertainty with relatively low yes we're off the historical lows, but relatively low compensation for both term and inflation premium. I think that makes the back end a lot more challenging, and because we view it as more challenging, there's less demand, you're gonna have more supply. I think that could be a factor towards a little bit longer run process of steepening out both term and inflation premium.

You back, Jeff, what's important here, and you said that there's a risk on field of this, and certainly we've seen it in technology and SPX before he ended his press conference up well over two point eight standard deviations? Is the answer here, Jeff, that everything is just playing solid. There isn't the polarity of a boom economy or doom and gloom. It's just a solid American economy.

You back, Jeff, what's important here, and you said that there's a risk on field of this, and certainly we've seen it in technology and SPX before he ended his press conference up well over two point eight standard deviations? Is the answer here, Jeff, that everything is just playing solid. There isn't the polarity of a boom economy or doom and gloom. It's just a solid American economy.

It's pretty solid, Tom.

It's pretty solid, Tom.

I mean when you look at that domestic demand component and it's so solid that you know, last Friday when I was on we talked about the question that was asked a bit today.

I mean when you look at that domestic demand component and it's so solid that you know, last Friday when I was on we talked about the question that was asked a bit today.

You know, how restrictive is policy?

You know, how restrictive is policy?

Really you're not really seeing it in the economic slowdown that you'd otherwise expect outside.

Really you're not really seeing it in the economic slowdown that you'd otherwise expect outside.

Of the interest rates sensitive sector.

Of the interest rates sensitive sector.

So for risky assets and for credit, as I just mentioned, I think that's a good thing. So I do think that the strength of the economy here helps to underwrite some risk taking in a broad sense, and there's a bit of a worry there that that might be leading to maybe less progress on inflation.

So for risky assets and for credit, as I just mentioned, I think that's a good thing. So I do think that the strength of the economy here helps to underwrite some risk taking in a broad sense, and there's a bit of a worry there that that might be leading to maybe less progress on inflation.

But I think what we heard from the chairman.

But I think what we heard from the chairman.

Today, they don't need Yes, they're going to say we want to maintain policy and get back to two percent. But it could be a long period of willingness to accept two and a half to three percent as good enough.

Today, they don't need Yes, they're going to say we want to maintain policy and get back to two percent. But it could be a long period of willingness to accept two and a half to three percent as good enough.

Take the win.

Take the win.

We've come from seven down to below three. That's a good outcome, and not risk the economic growth side by overtightening.

We've come from seven down to below three. That's a good outcome, and not risk the economic growth side by overtightening.

Jeff love doing this with you. Thank you, sir Jeff Rosenberg there of black Rock wrapping up FED decision day and CPR Lornich as well. Let's get some fun of words around a type or take ky first to you fun of thoughts.

Jeff love doing this with you. Thank you, sir Jeff Rosenberg there of black Rock wrapping up FED decision day and CPR Lornich as well. Let's get some fun of words around a type or take ky first to you fun of thoughts.

It's going to be eventful through the rest of the year. I thought it was off of CPI this morning, just spectacular. Yes they're data dependent, but you know what, it's going to be eventful right up to Jackson holand beyond.

It's going to be eventful through the rest of the year. I thought it was off of CPI this morning, just spectacular. Yes they're data dependent, but you know what, it's going to be eventful right up to Jackson holand beyond.

Anyone who is looking for some sort of certainty in the bond market, some sort of stability, good luck, because right now you have a green light to go crazy to see Bonker's types of moves. To quote one of our guests earlier this week, because right now there is no central planning when it comes to where reads are going, and that to me is significant at a time where at one point that was considered a financial stability risk. Right now it doesn't seem to be. I don't know if that's a sign of strength of fragility, but right now, that is the takeaway. These double digit moves, it yield on a daily basis, they seem to be here to stay well.

Anyone who is looking for some sort of certainty in the bond market, some sort of stability, good luck, because right now you have a green light to go crazy to see Bonker's types of moves. To quote one of our guests earlier this week, because right now there is no central planning when it comes to where reads are going, and that to me is significant at a time where at one point that was considered a financial stability risk. Right now it doesn't seem to be. I don't know if that's a sign of strength of fragility, but right now, that is the takeaway. These double digit moves, it yield on a daily basis, they seem to be here to stay well.

Right now we're giving some of that up. Just recap some of the price section session highs on the S and P five hundred. About twenty minutes ago we were hired by more than one point three percent, now positive by about seven tens to one percent on the SMP. In the bond market at the low's on a two year year old, we've been down sixteen basis points. We're now down about seven or eight. So some of this unwidening just a little bit. The team's going to take over from here. They'll run you through the close. They'll catch up with former Fed Governor Betsie Duke and Jim Chenos. Look out for those conversations from New York City. That's it for us. We'll see the end of July all away. Until then, from New York was the Feticides

Right now we're giving some of that up. Just recap some of the price section session highs on the S and P five hundred. About twenty minutes ago we were hired by more than one point three percent, now positive by about seven tens to one percent on the SMP. In the bond market at the low's on a two year year old, we've been down sixteen basis points. We're now down about seven or eight. So some of this unwidening just a little bit. The team's going to take over from here. They'll run you through the close. They'll catch up with former Fed Governor Betsie Duke and Jim Chenos. Look out for those conversations from New York City. That's it for us. We'll see the end of July all away. Until then, from New York was the Feticides