Making Sense of the FED's Inflation Data (w/ Ed Harrison and Ash Bennington)

TL;DR

Market awaits the Fed's statement, with inflation, inflation expectations, and the Fed's reaction function being key concerns.

Transcript

real vision daily briefing live without annette once again with ed harrison welcome back ed yes thank you ash good to talk to you good to talk to you as well and we were talking off camera a little bit about oil about price action of course about the fed meeting coming up later this week what are you looking at how are you thinking about these mark... Read More

Key Insights

• ❓ The Fed's statement will provide insights into its stance on inflation, inflation expectations, and its reaction function.
• ❓ The language used by Fed officials can impact market expectations, particularly the phrases "substantial progress" and "transitory."
• 👀 Bond yields are being closely watched, with a potential shift in the Fed's quantitative easing program's bond purchasing mix.
• 😘 The prolonged period of low interest rates and expanding balance sheets may challenge the inverse relationship between stocks and bonds.
• 📈 Uncertainty remains regarding the longevity of current inflation trends and the effectiveness of monetary policy.

Questions & Answers

Q: What are investors primarily waiting for before making any drastic moves?

Investors are waiting for the Fed's statement to gauge its stance on inflation, inflation expectations, and its reaction function to market conditions.

Q: How are inflation and inflation expectations impacting the market?

The transitory or non-transitory nature of inflation is uncertain, and inflation expectations can affect bond yields. Investors are interested to see if the Fed's reaction function has changed in response to higher inflation.

Q: How have bond yields and oil prices performed recently?

Bond yields have increased, with the 10-year US yield at 1.49%. Oil prices have risen to three-year highs, with WTI trading at $71.11 per barrel and Brent at $73.04 per barrel.

Q: What is the significance of stocks hitting 52-week highs?

Despite mixed market performance, a significant number of stocks reached their highest levels in a year, showing potential optimism among investors.

Summary & Key Takeaways

• Slow price action in the markets as investors await the Fed's statement.

• Key factors to consider: inflation, inflation expectations, and the Fed's reaction function.

• Three noticeable market trends: increase in bond yields, rise in oil prices, and a significant number of stocks hitting 52-week highs.