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GERMAN DATA

Possible Delay to German State-by-State CPI

EQUITY TECHS

E-MINI S&P (H3): Bull Cycle Extends

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Bullard Adds To Fedspeak Pushing Terminal Close To Cycle Highs

FED
  • Latest talk from Bullard (’22 voter) helps push Fed Funds implied rates to post-CPI highs for the Sept FOMC and just offs yesterday’s cycle highs further out, with 68bps for Sept, 131bps to 3.64% for Dec and 145bps to a terminal 3.78% for Mar’23.
  • Speaking to CNBC, he repeated his rate guidance of favoring a front-loading of rate hikes (recently endorsing a 75bp hike in Sept) to hit his long-held stance of 3.75-4% by year-end.
  • He acknowledges that he has deliberately not talked much about rates in 2023 because of heightened uncertainty but he sees a baseline where inflation is more persistent than what the market, leading to risks of higher rates for longer.
  • He doesn’t take too much signal from equities when it comes to forming monetary policy views, noting a few stocks can drive things with a heavy Silicon Valley tech segment.
  • On market pricing, the rise in bond yields reflects ‘better pricing’ of risks whilst there is recession risk but he doesn’t know if will happen and points to relative strength in GDI from this morning’s Q2 data compared to GDP (as noted at the time here): in this particular instance GDI is the better metric of what was going on in 1H22 - it’s a slowing economy but with a really lively job market.

FOMC-dated Fed Funds futures implied rateSource: Bloomberg

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