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2023 Commentaries

Victory Cuts

When I first saw the Fed’s SEP on Wednesday afternoon, I was quite surprised, even shocked, at the 50bps drop for the federal funds rate forecast at the end of 2024. After all, the core PCE projection had only dipped by 0.2 to 2.4%, and the unemployment rate projection remained unchanged at 4.1%. This was […]

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Misunderstanding US inflation during the Covid-19 era

Since the 9% peak in CPI last June, we have witnessed one of the fastest disinflations in modern history. What makes this collapse even more notable, however, is that it has occurred while the unemployment rate held below 4% and GDP growth ran well above trend. In fact, over the last five quarters, GDP has […]

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How much of the Fed put has shifted to the balance sheet?

As the rate market churns, I thought it might be useful to discuss the outlook for one of my favorite option structures: the Fed put. It’s been just about two years since I walked away from a longstanding love affair with risk parity. Sadly, the supply-side-driven inflationary dynamics that began in 2021 caused the Fed […]

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Staying positive

As a general rule, I endeavor to steer away from “normative” analysis in these commentaries. I do not believe that my thoughts on what should happen in markets or policymaking or politics or geopolitics matter much. Instead, I strive to give clients my best projection of what I think will happen. This “positive” analytical framework may appear to some as […]

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Are we still jacked up on the stock of QE?

Before embarking on today’s exciting topic, I want to highlight two upcoming events in October. First, on October 2nd, I will be hosting my good friend David Rosenberg for another macro chat/debate in NYC. Last autumn, we had a quite spirited discussion on the risk of a recession, and I am sure this time will […]

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