Read on the Trading Floor - 01 Dec 2023
Today’s focus… Central Bank Communication vs Market Pricing (The Sequel)
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Macro Themes At Play
Central Bank Communication vs Market Pricing (The Sequel)
JPow's fireside chat
ISM .... oomph
GS calling for a Q2 ECB cut
Some week ahead previews of note
Theme 1 - Central Bank Communication vs Market Pricing (The Sequel)
What an odd cycle of forward guidance we've worked through. Central bankers all coalesced on the view in the early part of last year that inflation would be transitory despite it exploding to decade highs and now as disinflation has run through the global economy (China exporting deflation, slide in commodity prices, base effects, higher real rates, AI productivity gains etc), Team "Higher for Longer" has now appeared out of the ashes of Team “Transitory”.
"November saw the biggest easing in financial conditions in history" (ZeroHedge). If Central Bankers are remaining cautious because they fear an easing of financial conditions will rekindle inflation, well it isn't working ...
Source ZeroHedge