Making Sense

"Champions aren't made in the gyms. Champions are made from something deep inside them -  a desire, a dream, a vision" ~ Muhammad Ali Fed Fund Pricing for interest cuts was seen at 47 bps for 2024. Q1 GDP came in line with estimates at 1.4%, however, consumer spending was revised lower to a modest 1.50% which means consumer coming in at a lot weaker position in Q2.  The Atlanta Fed GDPNow estimates were revised lower to 2.20% IN Q2 from 3.00% at the end of prior week. DXY found resistance at the 106.13 levels and is seen lower in Asia Open today at 105.67.  Durable Goods Orders rose 0.10% mom driven by an increase in new orders for transportation equipment.  U.S. PCE Prices showed a welcome moderation with headline number flat over the month and the Core PCE numbers 0.10% higher over the month. Deflation in Durable goods at -0.79% mom and -0.15% in non durable goods alongside a less than 0.20% rise in price of Services and -2.12% mom change in price of core services ...

WSJ carried an article "Powell Dials Back Expectations on rate cuts" and the current Fed Fund Pricing implies 41 bps of rate cuts into 2024 with 23 bps of rate cuts priced into the Sep 2024 Policy as against the Fed SEP of 75 bps of rate cuts.  Chair Powell remarked:  "The recent data have clearly not given us greater confidence and instead indicate that it is likely to take longer than expected to achieve that confidence" Fed would leave rates at their current level “as long as needed” We think policy is well positioned to handle the risks that we face”. “Right now, given the strength of the labor market and progress on inflation so far, it’s appropriate to allow restrictive policy further time to work.” USTs continued to sell off on a 6 bps rise in Real Rates. The Housing data release showed weakness. The Industrial Production data , however, rose 0.40% mom. USD Index continued to make cycle highs at 106.52 and I'm looking out for signs of an intermediate corr...