I likhet med DB har jag länge trott att FED skulle blivit hökaktig för länge sedan. Detta har varit fel. Senast igår uttryckte Yellen sin duvaktiga syn på penningpolitiken.
Så här skriver DBs strateg. Ta er tid att läsa det!
I’m marketing in Europe this week and the common theme I’m hearing from investors is that they have given up on their macro views of higher US rates, stronger dollar, and higher vol. The conviction is still there but the theme in many meetings is that ”We will put the trades on again once the Fed turns hawkish”. For a long period, all my meetings were about when we would hit the Fed’s 6.5% threshold for the unemployment rate. We are now at 6.1% and Yellen at HH continues to push a very dovish message. The FOMC needs to protect its credibility by recognizing that the data is getting better. In some sense, the Fed’s continued dovishness and lack of recognition of the improvement in the data has punished investors so much for so long that many investors have capitulated and their investment decisions are not driven by the improving data but by when the FOMC will recognize that the data is getting better. Or put differently, Fed dovishness is driving basically all financial markets and this has created a very unusual trading environment where markets are calmer than they have ever been before, see also the chart below, because investors across asset classes are all waiting for a change in the Fed tone. While this may be good for housing, consumers, and bank lending here and now it continues to build up the risk that markets will turn around in a more violent fashion once the Fed finally turns hawkish. Or worse, if core PCE inflation moves to 2% with a still dovish Fed we could see the bond vigilantes come rapidly out of hibernation. I worry what will happen when everyone will try to reverse their positions at the same time in rates, credit, FX, and equities, in particular with low dealer inventories of spread product. Watch the inflation and wage data as leading indicators of the change in Fed tone, we have a number of those releases over the coming weeks, including ECI the day after the July FOMC meeting. Bottom line: Keep your blackberry near when you go to the beach this summer.