the Fed Didn’t Pivot Yesterday… If Anything It Doesn’t Need to Anymore – Investment Watch

By Graham Summers, MBA

Yesterday I asked, “Is the Fed about to hit the PANIC! button like the Bank of England?

Markets certainly did, with stocks, Treasuries, oil and gold rising yesterday, boosted by the announcement that the Fed had scheduled an emergency meeting for 11:30am EST.

It was only a matter of time before Fed Chairman Powell appeared and told the markets that the Fed was reintroducing quantitative easing (QE), just as the Bank of England (BoE) had done last week.

Except… President Powell he didn’t appear The Fed made no announcement of any kind, except that it was updating its rule on debit card transactions.

Debit. Card. Transactions

Not the reintroduction of QE. It’s not a slowdown or a potential end to rate hikes. And certainly not a Fed pivot of any kind.

That’s not to say Fed officials didn’t refrain from making any public appearances yesterday. John Williams, the president of the New York Fed (the branch in charge of market operations) gave a speech in Phoenix, Arizona in which he stated:

1) Inflation is too high.

2) Our work [cooling demand and reducing inflationary pressures] it’s not done yet

3) The fall in commodity prices is “not enough” to “reduce” the “pervasive inflation” caused by the demand for goods as well as the demand for labor and services.

So… no pivot signal.

If anything, yesterday’s market action makes a Fed pivot less likely anytime soon. With Treasury yields and the $USD falling yesterday, rate and liquidity pressures are much lower than last week.

The reversal of the $USD in particular is a welcome relief as it allowed the British Pound and other currencies that were under pressure to rally strongly… But this again erases any need for the Fed to pivot.

Bottom line: The Fed will undoubtedly pivot at some point…but not now. And the market action has made the probability of a pivot MUCH lower.

So enjoy the relief rally…but don’t expect it to last long. Because the Great Crisis has finally arrived… the one that in 2008 was a warming.

In 2008 entire banks went bankrupt. In 2022, whole countries will do it

And it is inflation that triggered it!

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