- We're going to have low readings of y/y inflation drop out in H2
- Because of that, we get a slight rise in core inflation because of that
- If we get more readings like today, it would help
- We don't have a high confidence in forecasts
- Regardless of the dots, everyone at the FOMC would say they're 'very data dependent'
The bolded is all that really matters here. It's safe to go back to watching data.
- We are seeing gradual cooling in the labor market as it moves into better balance
- There's an argument that labor gains are overstated but they're still strong
- Our sense is that the rate cuts that were going to take place this year will take place next year
- We will have to see where the data light the way
- Today was a better inflation report than almost anyone expected
- We've made pretty good progress on inflation
- Wages are still running about a sustainable path
- Wages are not the principle cause of inflation but needs them to come down for overall inflation to get back to 2%
- It may take 'several years' for bulge from higher market rents to filter through
- Credit card balances and defaults have been going up but they're not at high levels
- Consumer spending is still growing solidly
- Our plan is not to wait for things to break and then try to fix them
The US dollar continues to grind higher on Powell's comments. That argues that the market thought Powell would surprise on the dovish side as well, or squarely put a Sept rate cut on the table, particularly after CPI.
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