This Week’s Hotly Anticipated Events Completely Failed to Break The Stalemate
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June 17, 2023

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Let’s cut to the chase: the financial world waited with bated breath this week, with an air of suspense that could rival a cheap thriller novel. We’ve had our eyes glued to the two big bad wolves: Tuesday’s unveiling of the Consumer Price Index (CPI), and Wednesday’s whispered secrets from the Fed. Sadly, these wolves turned out to be more like cuddly teddy bears, leaving us with nothing more than a cliffhanger ending and another chapter to turn.

See, the CPI is like the celebrity of economic reports. It has a grand entrance every month, often stirring up quite a drama among the rates. But alas, this time it left the party a little too early, giving us nothing more than an unchanging month-over-month inflation rate, as stagnant as a still pond.

Just when we thought the Fed’s policy announcement would be the hero of our story, it too fell flat. We were all ears, hoping for a sneak peek into the future of the Fed’s rate path. But despite our high hopes, the grand reveal of “the dots” left us with as many answers as a cryptic crossword.

Sure, the average vote was 0.50% higher, teasing us with the possibility of two more rate hikes in 2023. But without guidance from our starlet, the CPI, it was just another piece in the jigsaw puzzle.

The drama didn’t stop there, as markets reacted like a heartbroken lover to the Fed’s inclination towards even tighter policy. Thankfully, our hero Powell swooped in to calm the storm. He reminded us that these dots aren’t fortune cookies; they’re just a guesstimate. As the saying goes, the only certainty in life is uncertainty.

So, we’re back at square one, with our eyes peeled for clues in upcoming economic reports. It feels like we’re at the world’s most confusing crossroads: one sign pointing towards sunshine and growth, the other predicting doom and recession.

As for our trusty companion, the 10yr yield, it seems to be going through a mid-life crisis. It’s not quite sure whether it’s more comfortable in its old shoes under 3.4%, or if it wants to venture out into the unknown.

And here’s a fun fact for you: mortgage rates, like loyal sidekicks, often follow the lead of 10yr yields. Now, isn’t that sweet?

Next up, we’re turning our detective’s gaze towards the economic indicators. Some economists, like the ever-optimistic Justin Wolfers, are basically yelling “no recession in sight!” with a megaphone. Others, however, are quietly whispering about an impending downturn.

Talk about a plot twist. It’s a bit like watching a ping pong match between “recession” and “all’s well”. One minute, Consumer Sentiment’s looking up, and the next, jobless claims are at their highest since 2021.

But that’s the beauty of the game, right? We’ve got a potpourri of data points, all arguing their case, and the interest rates stuck in the middle like a kid caught between squabbling parents.

So, for now, we’re all popcorn in hand, eagerly awaiting the next scene in this thrilling saga of rates.

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