저자: Kevin · 외국인
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연준의 5월 금리인상(25bp) 가능성이 매우 높다고 봄. 시장은 5.125%까지 인상 후 동결을 예상하나 일부 연준 위원(불라드)은 5.6~5.7% 필요 주장. 5년 브레이크이븐 인플레 기대는 하락 추세로 긍정적이나 미시간 1년 기대인플레 반등은 위험 신호. 실업 공고(WARN)와 해고 증가 우려, 베이지북은 물가 둔화 시사. 5월 CPI/PPI 없이 6월 전 두 차례 물가지표를 주시하며 연준 결정은 지표 연착륙 여부에 달림.
다듬은 글
well the Federal Reserve is back at it again rate expectations are as follows and after rate expectations we're going to look at their latest beige bug as well as some recent commentary we'll try to align that up with what we've got going on with war notices and what are those anyway we'll talk exactly about that but First Rate expectations we have about a 13.9 market expectation of a pause which basically means you're not going to get a pause in May instead you're much more likely to get a hike in May and then maybe a pause which many are calling hike in May and go away that's hopeful but then again hope is not the best investing strategy right now we are though seeing Market future pricing at 86.1 percent for a hike to five to five and a quarter percent in may now this is particularly important because you've had individuals come out like Loretta master and other folks from the FED Kaplan otherwise multiple fed individuals come out and suggest just we just need to get slightly above five percent and then pause this is sort of the suggestion they're making catching you up to speed here with the exception of Bollard who thinks we need to get to 5.6 to 5.7 percent 5.6 to 5.7 would really leave us with three more rate hikes that would be a summer of rate hikes that's bullard's say but most fed officials seem convinced that we just need to get above five percent now since we're at 4.75 to 5 now one more raid hike actually puts us at an effective fed funds rate of 5.125 which is above five percent so technically a lot of the feds speak we're hearing now is reiterating that we're going to be above five percent with one more rate hike and maybe that's all we need to do obviously the FedEx fomc meeting is going to have a lot of stress around it because a lot of people are going to wonder what indications are we going to get for the future after May and that's a rightful question and we can look at some projections do keep in mind that the next fed meeting is actually coming up pretty close it's on May 3rd is then where the meeting starts on the 2nd the press conference is on May 3rd now what's really interesting is that's 12 days away from now it's kind of crazy to think here we go again we're going to have another fed meeting on a Wednesday in just 12 days so after that we'll have uh after the May meeting we'll have the June 14th meeting in the July 26th meeting and then we'll have a little break until September if Bullard has his way we'll get 25 25.25 most of the folks at the fed and the summary of economic projection from the Feb which have always been wrong in the past and always been low but if this time happens to be different and they happen to be right we'll only get one more raid height now what do we see in terms of expectations and how could these expectations potentially shift the federal reserve's rate hiking regime well first of all we know that break even inflation yields which is basically your five year uh difference between your treasury bonds and your treasury inflation protected securities tips those right now sit right here and these give you sort of a Market's expectation of what's going on with inflation clearly expectations are still trending down this is good though what we really want to pay attention to is that we have this corner over here a nice downtrend uh and you know we had a little Spike here right before the banking crisis a little bit of a trough after the banking crisis but we've been pretty nicely steadily trending down here now what's what I really like about this particular chart is we're actually not seeing a de-anchoring of those inflation expectations which we actually did see in the last University of Michigan survey last Friday now we won't get another rvey until next Friday which will be about five days away from the Federal Reserve meeting and hopefully that one year inflation expectation comes back down to the mid three and a half range where it was the last survey we got last week shot up to Mid fours and that's dangerous because the FED thinks inflation expectations are starting to de-anchor they will guaranteed rug polus and give us many more raid hikes than we could potentially bargain for Now understand this chart this in my opinion is the chart that tells us where the Federal Reserve Cuts this chart right here is the five-year break-even chart over the last five years and the last time the Federal Reserve cut we were right about here at this sort of red line over here this is about the end of 2018 it's actually probably closer to like right here it's probably around the last time the FED cut in addition to of course the covet pandemic when in March we got those dramatic rate Cuts probably right away round here so these are levels where the Federal Reserve has last cut in terms of break evens and you can see if we throw up a green line over here let's do that if we throw up a green light you can see we've still got some work to do to be anywhere close to where the Federal Reserve has historically cut but we are getting closer to that 2018 level so there we go keep that nice and straight there we go so that's going to put us somewhere around 1.6 ish where we want to see this go we've had a wonderful downtrend yeah we've had some ups and downs here the trend is clearly down however you look at it it's trending down it's just going to be how long is this trend going to take where do we draw that trend line and what do we ultimately get if we go with sort of an average or probably something like this which realistically if we then let's say we're able to extend this out we're probably not looking at that cut until realistically somewhere around November December January before we actually get to that level but the markets are pricing in Cuts sooner than that and that's leading some folks to wonder do the equity markets have it wrong and what we're going to do is we're going to look at these expectations and how they've changed over time and then we're also going to look at War notices speaking of Warn and a warning all of our marketing is ready for moving from the individual courses strategy we are changing everything over tonight at 7 pm which does mean there's probably an extra like uh 13 12-ish hours here or whatever that if you want to get that final coupon before we get rid of the uh the lowest prices massive price increase the barrier to entries going up substantially we're moving on uh and we're still providing value to these programs and still doing live streams we're just saying we're going to a completely different strategy in terms of pricing I'm serious when I say it like if you want the best price guaranteed now is the time so check out those programs and consider that link down below but what do we have right here so this is the 421 implied overnight rate the probabilities chart and uh what's worth noting here is it looks like we're thinking a peak pricing right now might actually come somewhere over here in June so what's interesting about this chart compared to this chart right here is you have a shift now this is the March chart okay so this is March 31.
and then this prior chart that I just showed you is the um uh there it is is the April 21 so today chart and what you'll notice is the peak is actually in the June meeting the way the market is currently pricing and rate projections so that does potentially call for two more hikes whereas over here the peak was in May so in other words after the banking crisis kind of turned out to be a little bit of a nothing burger and now there are expectations that the Federal Reserve is totally willing to sacrifice more bank failures especially if they're just Fringe banks that had uh risky you know the standards of of Safety and Security then then why stop the raid hiking in other words and this is where markets are starting to realize yeah the fed's probably going to be willing to risk more of a banking crisis which there doesn't seem to be a banking crisis right now and if lending standards don't really tightened more than expected it's possible the FED is going to hike a few more times maybe hike in May and go away is unrealistic and markets are starting to price that in and I think that's why unfortunately we've had about now five days in a row of a negative NASDAQ we're on day four in a row of negative for the Dow Jones and it does somewhat make you wonder hey uh is this potentially a red flag that um hey you you need to price in higher rate or a higher terminal rate and maybe we're going to be closer to what uh Mr Bullard over at the FED Belize which would be closer to about that mid five range something to start considering and a lot of folks say the stock market has not properly priced this in now when we look at War notices and then we'll look at the fed's beige book when we look at War notices we do get an indication that more layoffs are definitely coming but I have a problem when it comes to more notices and layoffs and I'll explain that so take a look at this this is a chart of War notices which are basically requirements by a larger World by the government but from larger companies to give a warning that there are layoffs coming within the next 60 to 90 days and as you can see here in blue the summary the white line is uh jobless claims the Blue Line shows you War notices and you can kind of see an inflection right here and right where there was an inflection where War notices started accelerating we kind of slowly started seeing claims Trend up as well well now those War notices are really starting to explode and that's leading to a lot of fear that we're about to see a big wave of unemployment numbers that just don't look that great now we've been adding fewer jobs to the labor force every month via the employment surveys but we're still vastly positive still averaging over 200 000 jobs per month net gained which is interesting because as a lot of people like to say hey layoffs are terrible oh my gosh if people get laid off then they're not going to be able to function and GDP is going to go down right that's traditional wisdom is that GDP goes down in layoffs but the reality that we ought to consider is well those people probably aren't going to sit idle they're going to get another job and if they're more productive in that other job then GDP could actually go up in layoffs so it sort of depends are we net seeing people struggling on the side of the street who used to be Finance or Tech professionals who just can't get another job somewhere else or is this just all a big rejiggering post covet that's a big question people are asking of course the biggest driver of the federal reserve's decisions is going to have to do with inflation and that's where it's useful to look at the fed's beige book so here's just I'm just going to point out some highlights from the beige book the beige book uh it just came out a day and a half-ish ago I think it's worth looking at some of the Nuance in it it's nothing a massively groundbreaking in terms of earth-shattering news but it gives you the perspective of where they're really kind of struggling to debate okay like should we pause after one more hike or are we gonna keep going TBD so here's sort of your overall view nine districts reported no or slight change in activity a three indicated modest growth so you've really gone from everyone expanding substantially to three having modest growth and most being flat in terms of U.S districts consumer spending was generally seen as flat tourism summon travel picked up across much of the country manufacturing flattered down residential real estate and sales softened modestly the do note that some prices have started to somewhat Trend up when it comes to residential real estate some folks are suggesting that's because maybe the worst is already behind us in terms of residential real estate labor markets so a show a slower pace of growth than in recent reports this to some extent is good because we don't want to see a wage price spiral but really even mentioning the wage Price power right now is so dated because really there are no conditions indicating we're facing a wage price spiral so really if you hear people talking about a spiral coming online it's misplaced there's no evidence of it right now so here you could see kind of a breakdown of various different regions where we look at Philadelphia Cleveland you can see that wages and other cost pressures continue to ease wage growth slowed to a modest Pace prices grew in Richmond at a strong pace so notice how we have these various different results it's like the entire country hasn't yet hit that softening right but most areas look at this Atlanta wage pressure is eased Chicago prices and wages Rose moderately San Francisco demand for retail Goods softened residential commercial real estate activity fell outlooks were largely negative in Dallas uh a Kansas City saw no pullback in in capex expenditure plans for companies and uh did uh it didn't see a pullback in planned wage increases either worker retention was higher even as wage growth slowed so you're seeing this sort of mixed economy right this There's No Smoking Gun here that we're definitely going into a recession and there's no smoking gun that inflation is definitely gone although most evidence is pointing to inflation being mostly gone but there's certainly no evidence of a wage price spiral we do have somewhat of a mixed picture here Minneapolis prices were steady and wages Rose slightly like none of this is suggesting that we need to get Paul volcker rug pulled right none of these summaries here suggest that kind of pain what I enjoy here is Boston noted that cost pressures abated noticeably sharp declines in the cost of raw materials and significantly lower freight costs on balance the Outlook called for further easing of price growth for the remainder of 2023 in Boston this is good we want to see that disinflation at effect because it means the FED has to do less right and that's good we want the FED to potentially have to do less inflation pressures moderated somewhat but remained widespread is what the New York area tells us okay so less pressure is but maybe somewhat still sticky what do we have in Philadelphia firms reported that prices continue to rise moderately however they noted that the rate of price increases appeared to be slowing this is good the FED should take solace and that some of these numbers are actually starting to look good right what do we have in the Cleveland District some manufacturers said they continue to raise prices to quote catch up from cost increases over the prior two years similarly some retail contacts reported selectively raising prices to cover higher costs although they did so cautiously so you're getting this more like timid price increasing right remember when we read the Olive Garden the gardens earnings call what did we find they're like hey we raised prices but but not all the way like not as much as inflation this there is a a point where people stop paying they're just a demand is not unlimitedly uh uh elastic uh or rather it is elastic in other words it's responsive to prices right so um uh so in other words there's a limit to how much people are going to pay and play in English right uh there were some reports by firms in both sector sectors see here it is that customers were starting to push back on further price increases this is the Richmond one uh which actually had probably the most sort of aggressive summary at the front except now they're starting to also notice the customer pushback buyers were reportedly winning more concessions compared to the past two years of a take it or lose it price environment says Atlanta Chicago tells us producer prices Rose modestly shipping costs had slowed noticeably consumer prices generally increased due to continued elevated demand and pass-through of higher costs so a general still Trend up of inflation right you're still seeing prices go up but nobody's talking runaway inflation which is good so it's getting closer to suggesting the FED might be in the right place still work to do though right we're not seeing all of these districts complain about prices declining in that case you'd be more in a position where the FED might be prone to pivoting and and uh you know cutting rates but we're not seeing that yet the economy is actually still holding up pretty dang well so we're kind of in that sort of uncomfortable Middle Ground where it's like huh things aren't bad enough for the FED to do anything inflation is slowly going away it's taking longer than expected which means we're probably just gonna have to deal with a higher rates for longer what do we have in the St Louis District overall contacts project increasing prices but at a slower Pace compared to Prior quarters yeah I mean this is so far very consistent with the FED giving us certainly another 25 BP hike and and playing a little bit more wait and see now the wait and see for the next period that is for May we're not going to get another inflation report I don't even think we'll have time for another jobs report in fact if we look at the BLS schedule of releases here we're probably not going to get another jobs report uh and I don't think we are the next jobs report right because that's on a Wednesday so no we're not going to get another CPI or jobs report the next jobs report is on the fifth uh and then we don't get inflation until the 10th and 11th via CPI and PPI and the next fed meeting is the middle of June so we've got uh you know somewhere in June 14 15.
so we've got some time that's actually oh that's interesting CPI is on the 13th in June so for the June meeting we'll actually have two inflation reports whereas for the May meeting we'll have zero more inflation reports just the data we already have businesses said some there's some difficulties with passing along cost increases most indicated that they expect prices to increase further over the medium term to rebuild profitability so you still have that tendency to okay we're still going to raise but not as high as we previously saw and you kind of see that reiterated in both Dallas and San Francisco uh and uh uh higher Final prices although again at a low at a slower Pace okay which all of this is very consistent with the FED is close little bit more work to do but we're getting there and so where do we sort of bottom line this when it comes to the Federal Reserve well in my opinion we are set in stone for a 25 BP hike May 3rd unless something crazy happens after that we're going to get two CPI reports before we hear from the Federal Reserve again that means those reports CPI and PPI as well as the fed's prefer PC all of those reports need to come in soft if those reports come in soft they'll dictate a pause if they come in sticky we'll get another 25 BP here so if you're making bets for May I think it's a foregone conclusion we're getting 25.
then everything is going to be right back on to writing those CPI numbers which we'll be getting now within the next week we will be getting the pce report and that sentiment report next Friday the next Friday report on sentiment is going to be huge because we want to see that anchoring of inflation coming back because For the First Time In This sort of tightening cycle we've actually seen a little uh oh uh expectations are unanchoring a little bit and that's dangerous so mark your calendar for 7 A.M on the uh 28th for that and then also 5 30 a.m on the 28th we'll be getting the pce report which is the fed's preferred inflation gauge but of course CPI has a lot of weight and so we expect the deflator to come in at 0.1 percent core month over month though that removes food and energy right the more volatile component we'll expect that to come in at 0.3 also pay attention to oil prices oil prices right now are slight Lee up for the morning up about four tenths of a percent but we're still nicely down probably down a solid five percent from the peak after the OPEC nonsense and uh since we've had earnings week now mostly behind us let's keep our fingers crossed for a nice bullish Friday so we could go into the weekend and not be in that situation where you have the darn stock ticker symbol screeners on your watch or your phone and all weekend you're just like yup still down we don't want that so with that said what are the expectations for the fan the fed's actually and it sounds crazy it sounds chillest chill-ish to say it but they're kind of doing their job and they're starting to succeed at it inflation's not running away there's no wage price spiral and the economy is still strong enough to or not a recession so far its best case scenario will it hold up nobody knows we do know 7 p.m tonight we're changing all the prices so uh cheers and uh don't sue me bro
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