Frank analysis, tunes, and quotes

Please see our Fed-watcher Philip Marey's take on the latest FOMC decision here for a thorough breakdown and forecast update.

In a Frank summary, the FOMC came very close to implying only two 25bp cuts this year, not three; reduced the number of cuts expected further out; their economic projections raised the level of GDP growth, didn't expect any increase in unemployment, and saw core PCE inflation over target until 2026; and the market initially sold off.... Until FOMC Chair said even if rates wouldn't go back to zero, there was uncertainty about even that; the Fed would need to pivot fast if unemployment rose sharply; and refused to address the loosening of financial conditions evident to everyone with a pulse. In short, Powell started crooning an old Sinatra tune:

"I like rate cuts in June, how about you? I like Wall Street's tune, how about you?

I love a buy-side election boom when due; I like buy-all-the-dips, bulls-are-right yacht trips, how about you?

I'm mad about unbalanced books, can't get my fill; And Bitcoin and gold's looks give me a thrill

Cutting rates whatever data show; When inflation ain't low may not be new

But I like it, how about you?"

And markets, and the dollar, swooned as another Sinatra classic immediately came to their minds.

"Fly me to the moon; Let me trade among the stars

Let me see what stonks are like; On Jupiter and Mars

In other words, don't hold my rates; In other words, Jay, cut them

Fill my trades with song; And let me punt for ever more

You are all I long for; All I worship and adore

In other words, please be true; In other words, Jay, I love you"