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C8 Hedge on The Full FX

BY JON WEBB
Mattias Eriksson and Jon Webb join host Colin Lambert to discuss the launch of C8 Hedge Read more →

Thoughts From The Divide: Regrets

BY JON WEBB
With the Fed in blackout, the market has been left to its own devices to digest this week’s onslaught of economic data. The inflation data was particularly indigestible. CPI numbers came in hotter than expectations, with both Core and Headline higher than forecasts on a YoY basis at 3.8% and 3.2%, respectively: only slightly worse than expected, but worse than expected. The market also had to deal with PPI that was substantially hotter than expected: the month on month came in at 0.6%, double the consensus forecast. Under the surface, goods inflation appeared to once again be rearing its head, accounting for “about two-thirds of the rise in the headline PPI”, courtesy of “a 1.2% surge in goods prices, the biggest increase since August 2023”. (The Houthis are not helping). While the Fed may have taken a temporary vow of silence, Yellen is under no such constraint. Speaking in an interview on Fox, the Treasury secretary said, “I regret saying it, [inflation,] was transitory”, following up with the jab that “I think transitory means a few weeks or months to most people” (how long is a piece of string? To be fair, predicting inflation is, apparently, tricky: “there are clear limitations to how far into the future we can forecast inflation”). Read more →

Thoughts From the Divide: Avoiding the Inverse

BY JON WEBB
Along with the release of the January Fed minutes this week, there was a deluge of Fed Speak, with Jefferson, Harker, Waller, and Cook all opining on the outlook for cuts. Most of the refrain was along the lines of Powell’s need for “confidence”, with Waller saying that he needed “to see at least another couple more months of inflation data” and Cook echoing the idea, saying that “as we gain greater confidence that disinflation is ongoing and sustainable, that changing outlook will warrant a change in the policy rate”. Harker pushed back on immediate cuts, asking for markets to “just give us a couple of meetings”, following up by saying, “I would caution anyone from looking for it right now and right away”. But while there may be some pushback on timing, that cuts are coming appears to be very much fait accompli in the mind of the Fed. Read more →
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