CME Group are either taking the bait on all the jawboning going on lately that has driven up Treasury yields and supported the US dollar, or there is still more work to be done in the fight against inflation. I’d like to think it’s the former situation, since I am out there with words about how the Fed is done hiking. But I’ve been wrong before and will be again. It’s the markets.
So, looking to the CME forecasting tool now we have a decided shift toward hawkish, for whatever reason may be in play, manipulation (jawboning) or real. Rate cut forecasts have been pushed out from the September time frame to the end of the year, and even then CME are not very resolved toward it.
It is interesting that amid the supposed bearishness of the debt ceiling confrontation the market is signaling otherwise. I think we are at a moment of max manipulation, but the signals are what they are (and were what they were until last week, hmmm…).
For its part, the Atlanta Fed tracker is still on the rate easing scenario. We noted its inputs in NFTRH 758. It includes CME input but also other items.
Personally, I think it is – to put it technically – a load of b/s. It’s a noisy time in the market, USD needed some help and gold and the precious metals complex were due for a correction. Meanwhile, Nvidia has happy news about AI chips and the stock market beat (rally) lives on.
Commodities have not been thriving (thus far) in this environment and we need to prepare for either a real inflation phase (likely including commodity exposure) or that this may be just another macro lurch in inflation (and by extension, Fed hawk) signaling along the way to the preferred disinflation-to-uncomfortably disinflationary plan.
