Hot Inflation Report Derails Case for Fed’s June Rate Cut

[Open Source Intelligence]

https://www.bloomberg.com/news/articles/2024-04-10/biden-s-battle-against-inflation-gets-tougher-with-latest-data

"Biden Predicts Fed Will Cut Rates Despite High Inflation"

Biden says that Fed will cut rates anyway

If Trump said this 4 years ago, Democrats would've screamed bloody murder about presidential interference into the independent Fed's running of the economy.

Politicians are hypocrites in case you can't figure it out.

[Open Source Intelligence]

https://www.ft.com/content/944ea914-07df-47c1-a70f-c4a56fec6e46

Bank of America and Deutsche Bank analysts now don't expect rate cuts until December. BofA says 4 in 2025 (article points out how much economic cooling do they foresee to have that occur? BofA report silent on that), Deutsche are down to 2 for 2025.

2-year T-bills sold off/yields up this week and the auctions were judged to have been poor.

A lot of companies with debt restructuring due very soon especially for real estate holdings as has been pointed out by others are pulling hair out and probably attempting some arm twisting of public officials. Wouldn't surprise me if it wasn't in part behind Biden's jawboning of the Fed. (A December cut doesn't help him politically.)

Notably, both Deutsche and Bank of America say that the Fed will stop cutting rates earlier than it had previously estimated, implying that something structural changed in the US economy that makes it able to withstand higher interest rates.

[Open Source Intelligence]

There is zero reason to cut rates for the foreseeable future.

Debt servicing is the main reason I think powell might still do it.

That would be such a historic massive punt though. You'd send the dollar crashing, treasury yields skyrocketing, every commodity under the sun including oil, gold, silver, Bitcoin shoots up in price. Federal Reserve legitimacy would be destroyed for a very long time.

Stock price of Nvidia has long ago left common sense and when it comes down is going to be a 1929-level mother of wealth destruction. Maybe that's the excuse Powell needs though to justify all the people crying to him for rate cuts.

[Open Source Intelligence]

Apparently the GDP price deflator inflation reading came in lower than expected today.

And, contrary to the comments here about the Fed rate, the private banks have their own ability to set rates, and apparently raised some of their mortgage rates today as well.

Both of these things apparently helped the stock markets.

Helped gold. Made a massive move higher to $2400.

"Higher for longer" island getting crowded. Meanwhile here was the investor take going back all of 4 months ago.

https://www.cnn.com/2023/12/10/economy/stocks-week-ahead-fed-higher-for-longer-crumbling/index.html

[Open Source Intelligence]

There's now a 20% chance according to markets the next Fed action will be a rate hike.

...all the companies that pushed off maturing debt to 2025. FT Alphaville with a good piece on private equity. https://www.ft.com/content/806034f0-9914-44c7-9065-9e5fd32e8eca

[Open Source Intelligence]

Japanese yen now 156 to the dollar.

[Open Source Intelligence]

Japanese yen now 156 to the dollar.

If the BOJ raises rates they will be a fiscal crisis in Japan so they are just hoping somehow the Fed cuts rates soon.  They are really in the same camp as the Biden campaign.

They've done intervention starting yesterday evening eastern U.S. time. The yen had gone as low as 160 to the dollar (34-year low). Zerohedge put up a snarkish tweet of the Bank of Japan spent $100 billion buying the yen just for the exchange rate to get back to...last week. Must be liberating to snap your fingers and set that much money on fire.

More in-depth: http://www.zerohedge.com/markets/yen-soars-after-japan-intervenes-prop-it-second-time-3-days

Too much sh**t going on...