Thursday, 17 September, 2020
Eternal dovishness…
Eternal dovishness
Nordea sums up the Fed meeting well;
A 2.4% inflation regime is de facto in place
Policy rates will remain ultra-low until 2023
A 100% reflation put is in place
2 dissidents from an all overall dovish Fed
AIT means inflation can overshoot for the coming 5 years, but nobody really knows by how much. We got nothing more clear on this post the Fed yesterday.
As they write:
“….Fed will have to ensure that equity multiples are trading higher and higher and higher, credit spreads are trading lower and lower and lower and $ is trading weaker and weaker and weaker”.
Who knows if they will win or not, but fighting Fed has been an expensive lesson…at least on the longer term horizon.
Futures are trading on the soft side (again). For now most people seem to be happy to buy the dip, but wonder how they will reason should this correct 10% quickly?
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