I have been cogitating over a couple of things to throw out there. One is whether the supportive liquidity is set to change once RRP is on the floor, tax season comes, and money flows out of reserves deposited at the Fed. The second thing and this may not be a big thing or it might be as how the Fed adjusts there SEP forecasts. Recall in Sep 2023, they jacked up the 2023 and 2024 dots, and markets threw a cow over the next 5 weeks or so. I guess with all the talk of AI and how technology can get rolled out into other sectors like retail and healthcare, which leads to productivity boost, the market is pricing a neutral rate of 3.5%, but the Fed is stuck at 2.5%. So you might think the Fed moving or inching toward the market in the dots has no impact. But still recall last Sep, so maybe its something to be concerned about.
I have been cogitating over a couple of things to throw out there. One is whether the supportive liquidity is set to change once RRP is on the floor, tax season comes, and money flows out of reserves deposited at the Fed. The second thing and this may not be a big thing or it might be as how the Fed adjusts there SEP forecasts. Recall in Sep 2023, they jacked up the 2023 and 2024 dots, and markets threw a cow over the next 5 weeks or so. I guess with all the talk of AI and how technology can get rolled out into other sectors like retail and healthcare, which leads to productivity boost, the market is pricing a neutral rate of 3.5%, but the Fed is stuck at 2.5%. So you might think the Fed moving or inching toward the market in the dots has no impact. But still recall last Sep, so maybe its something to be concerned about.