We for sure should watch long rates Fed has to figure out why 10-year is rising and keep an eye on long ratesThis 12-18 month timeline is very interesting as it sounds like a much slower process.I don’t think we’re at neutral nowCore PCE is still too highIf there is disagreement over the neutral rate, it does make sense to start slowing the pace of rate cutsThe basic story of the economy remains falling inflation, labor market cooling to full employmentDo not think rates will go back to where they were before the pandemic
This line about 12-18 months suggests moving slowing and I would put it down as more evidence that a December cut is less likely. Market pricing right now is 59% for a cut, that’s come down significantly this week (from 85% Monday) in large part due to Powell yesterday.
This article was written by Adam Button at www.forexlive.com.
