The Fed is right to be in the slow lane and conditions for drivers have deteriorated
The correlation of US 2 year yields and the weakening of the Dollar since September has previously been highlighted by Macro Thoughts and when the currency is devalued by as much as 10%, even core inflation rises, as the cost of energy imports rise, growth suffers and, as producer costs rise, they have less room to raise wages; this was a problem Macro Thoughts warned against when the Bank of England cut rates in 2016.
Macro Thoughts, April 24, 2018, ‘Powell has seen US data falter in 2018, and if he is data driven, should heed the warning signs, especially as US employment has yet to return to pre-crisis levels. The Fed may believe it needs to get rates back to normality, but their out of date thinking is impacting on the real economy, and preventing China, the UK, Japan, Australia, Europe, South America and Asia from adjusting their economies’.
Macro Thoughts conjectured that February’s extremely large NFP was due to those wanting to benefit from tax cuts boosting jobs data. The sudden slowdown of the US economy, which has surprised many....It is not just enough to say inflation is at 2%....
US Total Personal Debt: $19tn....
Bad Timing....
Financial conditions to tighten in Q2, giving the ECB more problems....
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