The July Fed meeting was a gamechanger for global financial markets. Abandoning its forward guidance, the FOMC has now moved to a data dependent stance. Fed Chair Jerome Powell didn’t do much to push back on market expectations that we’re on the other side of peak Fed hike expectations, and rates markets continue to discount rate cuts in 2023.
So, let’s look at the data. Forward looking measures of inflation suggest that peak inflation is in the rear-view mirror, and the 2Q’22 US GDP report indicated that the economy is slowing (recession or not, there’s no reason to quibble over the technical definition).
