Daily Alert – Wednesday 8th February 2023: Powell re-iterates the need for hiking

Mark NugentDaily Alert, Feb 2023

Daily Alert – Wednesday 8th February 2023: Powell re-iterates the need for hiking

Good morning.

Fed Chair Powell was measured when he spoke yesterday. Last Wednesday’s rate setting meeting and press conference was interpreted by the markets as being dovish. Then we had Friday’s jobs report (NFP) which showed a humungous increase in jobs in the US, a clear sign of a healthy economy that was far from being pushed into recession by the Fed. (Maybe people should remember it is just a single data point and historically prone to significant revision). So, all eyes were on Powell yesterday to see what he would say. He was measured, as I said.

He reiterated his prior message that rates need to keep rising to tackle inflation, and that they might reach a higher peak than the markets anticipate. Slightly more hawkish was Minneapolis Fed President Kashkari, who said that last Friday’s NFP shows the Fed needs to keep raising interest rates.

I went long on WTI (oil). Feeling a touch of FOMO about it as I may be a day late to the trade. Still, it’s in the money, with the stop to breakeven, and nothing to lose. Happy days.

I’ll be back tomorrow.

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