Macro & Volatility™
Macro & Volatility™ #7: Slow Curve Ahead
Jun 16, 2024
Josh Silva and Michael Purves discuss Powell's dovish Fed commentary and its impact on the yield curve, potential rate cuts, and long-term policy rates. They delve into equity volatility, inflation factors, and expectations for the upcoming June Fed meeting.
07:51
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Quick takeaways
- Powell's dovish tone hinting at no further hikes led to rate market repricing from 7 to 1 anticipated cut this year.
- Narrowed Fed rate forecasts expected to decrease interest rate market volatility, potentially capping equity highs.
Deep dives
Implications of the Fed Meeting and Powell's Commentary
Powell's recent dovish commentary following the Fed meeting hinted at no further hikes, leading to a significant repricing in the rates market from seven cuts to merely one anticipated cut this year. This stance introduced a more challenging path for yield increases but left room for potential reductions based on future data. Powell's avoidance of clarifying long-term policy rate shifts added uncertainty, especially regarding inflation dynamics and structural changes. The upcoming summary of economic projections in June will play a crucial role in shedding light on the Fed's outlook, impacting both short and long end yield trajectories.
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