Range-Bound

August 15, 2023 • Estimated Reading Time: 4 minutes

Macro Markets

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The biggest event of an otherwise dead week is the FOMC minutes. Wednesday 2pm EST we will see the minutes from July 25/26. During that meeting the FOMC raised rates by 0.25% pushing the overall rate to 5.25-5.5% after their pause in June. The main focus of this reading will be to understand if this is it for rate hikes. We need to get insight into how long the Fed plans to keep rates elevated as well.

Fed Chair Jerome Powell reiterated at the press conference the significance of upcoming data related to the labor market, inflation, and global financial conditions in steering the Fed’s future decisions. They have been quite data focused and have emphasized time and again further hikes will be data focused only.

Minneapolis Fed President Neel Kashkari emphasized on Tuesday the need to avoid premature tightening to prevent a scenario akin to the 1970s. While expressing satisfaction with inflation progress, he refrained from ruling out further tightening.

Richmond Fed President Tom Barkin said that there is still time before the next meeting to see how the economy and inflation are behaving, while his colleague, Atlanta Fed President Raphael Bostic hinted at a lack of urgency for a September rate hike.

Despite the unanimous decision to raise rates by 25 basis points in July, a growing divide appears between hawks and doves on the board, foreshadowing potential future disagreements. Look for further scenario analysis and breakdown of strategies for trading of the FOMC minutes in Wizards Musing down below.

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