- Increased uncertainty about monetary policy
- Fed will have to raise rates again to help lower to high inflation
- Fed forecast of one additional hike in 2023 looks reasonable
- After hiking again Fed will likely hold steady for remainder of the year
- Financial sector stress has taken some pressure off Fed to hike rates
- Banking sector are strong, resilient but likely to pull back on lending
- Likely lending cutbacks will restrain economy
- Supported Fed's most recent 25 basis point hike
- Will use all necessary tools to counter financial market stress
- The economy is a stronger-than-expected
- Economy likely still feeling shift in Fed policy to more restrictive stance
- Job market strength is likely to moderate
Tomorrow the core PCE data will be released at 8:30 AM with the expectations of a rise of 0.4% for the month of February. That is still too high given the Fed's target of 2.0%. However with bank credit tightening, that will have an additional effect on the economy and potentially inflation .
US stocks have come off a bit and trading near lows for the day.
- Dow industrial average is down 24 points are -0.07% at 32693
- S&P is up 8.72 points or 0.21% at 4036
- NASDAQ index is up 54 points or 0.46% at 11980
In the US debt market, the yields are off their highs but still relatively low:
- 2 year yield 4.107%, +2.7 basis points
- 5 year yield 3.675%, unchanged
- 10 year yield 3.556% -1.0 basis points
- 30 year yield 3.756% -2.1 basis points