In prepared remarks yesterday to the Economic Club of New York, Fed Governor Christopher Waller reaffirmed the FOMC’s posture that the next move on rates would be a cut. But his remarks went a little further than previous Fed comments by acknowledging that recent inflation data had been ‘disappointing’ and that he wanted to see ‘at least a couple months of better inflation data’ before cutting. He went on to say that it was ‘appropriate to reduce the overall number of rate cuts or push them further into the future in response to recent data’. Markets may not have been surprised by Waller’s (and the FOMC’s by extension) rate cut pushback, but there was some disappointment. The top-ten most repeated single words in Waller’s text were: inflation (31), productivity (26), data (25), growth (22), percent (22), rate (21), recent (16), February (14), labor (13), and progress (13). Two-word single phrases were: labor market (10), productivity growth (9), monetary policy, progress inflation and recent data (5).
The dollar gained against G10 currencies in the wake of Waller’s speech, and lifted the U.S. Dollar Index to 104.727, its highest point since February 14th. U.S. Treasury prices dropped, lifting yields in all yield curve tenors. The 10-year yield gained 0.03%.
In economic data reported today: U.S. Annualized 4Q GDP was 3.4%, above the 3.2% estimate; Personal Consumption was 3.3% (3.0% est.); Core PCE Price Index 2.0% (2.1% est.); Weekly Initial Jobless Claims 210k (212k est.).
Gold closed at an all-time high yesterday at $2,194.02 and is higher today 0.63% at $2,208.97 on building momentum.
