Powell Says Fed Still Has a 'Ways to Go' After Half-Point Hike
Comment of the Day

December 14 2022

Commentary by Eoin Treacy

Powell Says Fed Still Has a 'Ways to Go' After Half-Point Hike

This article from Bloomberg may be of interest to subscribers. Here is a section:

“I wouldn’t see us considering rate cuts until the committee is confident that inflation is moving down to 2% in a sustained way,” he said. “Restoring price stability will likely require maintaining a restrictive policy stance for some time,” he said.

Eoin Treacy's view

The Fed’s preferred yield curve spread the 18m3m swap over 3-month Treasury yields is as inverted as it was in 2019, 2006/07 and 1999. That virtually ensures a recession is on the way. This is now the time to take big risks, there will be very attractive buying opportunities in 2023 because it takes time for the lagged effect of interest hikes to appear and rates have gone up very quickly in 2022.

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