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Bullard Sticks To His Guns

FED
  • Speaking to CNBC, St Louis Fed’s Bullard (’22 voter) sticks to his call of wanting to see the target range at 3.75-4% by year-end with a front-loading of policy to enhance inflation-targeting credentials.
  • Whilst the Q2 economic slowdown was “more concerning”, he doesn’t see the US in a recession right now with the jobs market “so strong” as the economy slows to a trend pace.
  • He wants “convincing evidence” of inflation gauges easing, similar to other recent Fedspeak, including Mester yesterday on wanting to see several months of evidence that inflation first has peaked (yet to be seen) and then coming down.
  • But some two-sided risk: *BULLARD: FED IS GOING TO FOLLOW DATA VERY CAREFULLY – bbg
  • Relatively little market reaction to headlines having already spoken yesterday, with 2Y Tsy yields already +4bps on the day at 3.09% after a +18bp increase yesterday, whilst Fed Funds implied hikes are holding around 61bps for the Sep FOMC as markets are torn between a 50bp and 75bp hike with still two payrolls and CPI reports plus Jackson Hole to come.

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