Five charts to start your day

Last week the Fed suddenly seemed a lot less hawkish. Here's why...

Why should the Fed's latest meeting matter to Americans? Take a look at this chart.

The Federal Open Market Committee (FOMC) is concerned about how inflation continues to persist. But they have refrained from signalling an immediate shift towards a rate hike. In fact, Bloomberg's FOMC sentiment indicator points to a shift back to dovish territory: a stance supportive of lower interest rates.

Markets reacted initially with optimism to the Fed's less hawkish stance: Treasury yields and the dollar fell, while stocks surged briefly before reversing gains to close lower.

So what’s going on? The clue is in what Fed Chair Jerome Powell said. In short, the restrictive nature of current monetary policy is having an impact on labour demand. He pointed to the labour market’s cooldown from its previously extremely high levels. The evidence here is the reductions in job openings and other metrics reported in the Jobs Report.

There has been a significant decline in job openings, which suggests the Fed's tight policy is effectively moderating labour market imbalances. The construction and retail sectors for example, have experienced sharp declines.

These are sectors that employ a significant portion of the US population, so a slowdown in these sectors hurts many ordinary Americans. This is a negative for sentiment, future economic growth and the Fed is a little worried. So, we will probably get neither hikes nor cuts for now. It will just be higher for longer.

Source: The Daily Shot

Coming up:

• China top India’s gold consumption

• Global gold production in 2023

• Starbucks’ sales have stalled in China

• Apple’s revenue falls less than feared

If you like the sound of that line up, this is usually a paid newsletter. You basically get all my best ideas daily. Hit the subscribe button if you are interested and this will be sent to your inbox daily.

---