quote:
Side 1 - With everything falling apart in the stock market and earnings in the tank a belief that the Fed will finally back off and maybe not hike 75 basis points or even 50

Side 2 - Belief that the Fed will continue with its final rate hike of 75 which they telegraphed and continue the tightening carnage

They've been adamant about hitting 3.4 this year, that's going to require at least a .5 increase in November. They've pretty much painted themselves into that corner.

What could happen is they go .75, but then right after the October numbers come out the have a special meeting and drop it by .25 (but that's ultimately useless because there's such a short timeframe between those two events that the extra .25 wouldn't have even disseminated out to the market yet).

We still have a long way until the November meeting and there's absolutely nothing to indicate things will be better (for the economy nor market) by that time, but likely to be much worse. I think that pain is what they're expecting to see and if it happens as they expect then that takes .75 off the table completely.

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ETA: if you’re gunna downvote tell me why you think I’m wrong you pussies

Welcome to my world. (that statement alone deserved my upvote)

This post was edited on 9/29/22 at 2:37 pm

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Posted by Shankopotomus

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Member since Feb 2009

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Posted on 10/4/22 at 4:32 pm to Bard

even more so lately when the goal has been "forward guided" as the hiking round ends when they get the Fed Funds Rate to at least a "real rate" of return

So if we believe in their resolve (my bet #1 or #2 from my post) --- that would mean they have to get the Fed Funds Rate to somewhere at least 400-450 basis points or so right?

With CORE PCE (their favorite measure) likely to be running about that (with base effects / last year's raised inflation) started to help the YOY statistics it seems they will hike again 75 points as they promised. We have definitely reached "peak inflation" for now because of the YOY run up. Demand falling off a cliff already all over the place.

only way I see any policy change at all is that something REALLY significant breaks in the US economy (UK pension fund style) OR a dramatic .. and I mean dramatic ... deterioration in the labor market by then. Today's JOLTS report shows how this data lags ... so they may keep going and THEN have the room to cut later when SHTF

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