### POV: HAS THE FED LOST THE NARRATIVE? A......>

FED: ### POV: HAS THE FED LOST THE NARRATIVE? A few clients have asked about why

there has been little reaction to Fed arch-dove Bullard's comments yesterday

suggesting market pricing for cuts is too aggressive.

- The Fed may now be at the mercy of external events, and the market is firmly

driving the narrative now (if it wasn`t already) having received mixed signals

on a 'mid-cycle cut' from Powell and co at the July FOMC.

- When Bullard made similar comments in June post-FOMC, dismissing a 50bps July

cut, markets repriced quickly (if only temporarily). This time, little reaction.

- Bullard said he`s waiting for earlier easing to feed through, but events are

overtaking. U.S. data does not scream recession but focus on US-China trade

headlines and recessionary global data. Global rate cuts are looking 2008-esque.

- SF Fed's Daly in a WSJ interview this week implied Fed cuts would be more

likely if other CenBanks ease, as r-star would be seen lower. (Note that the ECB

makes its move 6 days before the FOMC in September.)

- 50bps Sep cut likely to stay part priced: Fed may try to retake the narrative.

- Chicago Fed dove Evans today keenly eyed for further indications on easing.