While you can expect trading algorithms to give their usual lightning-fast take of today’s Fed minutes in the immediate moment of the document’s release, the rest of us may be better off glancing at the SparkNotes version. Which should read something like this: “guys, give us a minute.”
The world is watching the US Central Bank with peeled eyes. Not just because Jay Powell has become the subject of President Trump’s great ire, but because S&P 500 peaks and troughs have been marked by language from the Fed chief for more than a year. And with market participants of all forms – stock bears, stock bulls, gold bugs, Bitcoin believers — certain they already know the Fed’s fate, any narrative from the committee that isn’t perfectly aligned with that predestiny is likely to cause some discomfort in markets. Should it?
Powell has had multiple opportunities to clarify the Fed’s future path for interest rates as one in line with the bond market’s vision, yet he has decided to keep that path murky. Why is that a shock? It’s probably in his — possibly our — best interest. With the rest of the world teetering but our own economic story only showing the smallest of cracks, he leaves himself the most outs by keeping doors open to everything: cuts, a cut-cycle, or just a pause in rate changes. There are risks to each scenario, and the severity of each is subject to speculation. Powell is a man asking for time. Until it becomes clearer where the risks are skewed, investors may want to get accustomed to the Fed’s SparkNotes message: “guys, give us a minute.”
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