Daily Alert – Thursday 13th October 2022: Hawkish Fed kills talk of a pivot

Mark NugentDaily Alert, October 2022

Daily Alert – Thursday 13th October 2022: Hawkish Fed kills talk of a pivot

Good morning.

The minutes of the Fed’s most recent FOMC meeting were released last night. The members are very hawkish. They stated that the cost of doing too little to fight inflation outweighed doing too much. They fear inflation becoming embedded in the economy and are prepared for their rate hikes to come at the cost of higher unemployment.

The chances of a “pivot” to a more accommodative stance, if signs of rising unemployment and slowing growth are seen, now seem very low indeed. So, no equity rallies in the short-term, and continued USD strength.

Elsewhere the Bank of England re-stated that the emergency bond buying would end tomorrow, after it was suggested by the FT that it was not so clear-cut. The UK Chancellor graciously said that any market turmoil after Friday would be the fault of the bank. Pitiful.

I have not found any trades this week.

Tonight’s US CPI is the highlight of the week. If anything can change the Fed’s hiking mindset, it will be a miss to the low side on inflation. I will be watching closely.

I will be back tomorrow with brief videos of the two Japan225 trades closed last week.

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