Our team looks at a lot of research throughout each day. A few charts that caught our eye this week, and the way they fit the unfolding puzzle of evidence:
John Luke: The midpoint of the neutral policy rate hasn’t moved, but a few members have moved their targets higher
Source: Bloomberg as of September 2023
John Luke: and the market is again “catching up” to what Chairman Powell has repeatedly telling them what to expect
Source: Bianco as of 09.21.2023
Dave: It’s interesting to see how Fed “pauses” have replaced “pivots” in the lower rate environment of recent decades
Source: Strategas as of September 2023
Dave: As investors get used to the Fed “dot plots” showing a commitment to higher rates…
Source: Bianco as of 09.21.2023
Dave: it’s important to remember it wasn’t that long ago that ultra-low rates were expected by the FOMC members themselves
Source: Bianco as of 09.21.2023
John Luke: With a few glaring exceptions like 2021, Treasury yields have historically tracked fairly closely to Nominal GDP growth
Data as of September 2023
Beckham: and the Fed is now bumping up its projections of 2023 and 2024 Real GDP growth
Data as of September 2023
John Luke: but in the past, yield curve inversions have eventually led to recessions
Source: Bianco as of September 2023
Joseph: and the Conference Board’s Leading Economic Indicators (LEI) have fallen 17 months in a row
Data as of 09.21.2023
John Luke: CPI readings are still heavily driven by services inputs
Source: Strategas as of 09.19.2023
John Luke: muting the impact of recently rising oil prices on the “core” readings that seem to be closely followed by the Fed
Data as of September 2023
Brad: Those higher oil prices are leading to rising Q3 earnings estimates for energy stocks
Source: Strategas as of 09.20.2023
Brad: but the relatively small weighting of energy stocks means a muted impact on estimates for the S&P as a whole
Source: Strategas as of 09.20.2023
JD: Regular reminder that stocks and bonds often zig and zag together, especially in higher rate environments
Source: Verdad as of 09.11.2023
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