{"id":1454238,"date":"2024-01-30T20:25:00","date_gmt":"2024-01-31T01:25:00","guid":{"rendered":"https:\/\/bugaluu.com\/news\/?p=1454238"},"modified":"2024-01-30T20:25:00","modified_gmt":"2024-01-31T01:25:00","slug":"can-the-fed-cut-rates-with-financial-conditions-so-easy","status":"publish","type":"post","link":"https:\/\/bugaluu.com\/news\/can-the-fed-cut-rates-with-financial-conditions-so-easy\/1454238\/","title":{"rendered":"Can The Fed Cut Rates With Financial Conditions So Easy?"},"content":{"rendered":"

Can The Fed Cut Rates With Financial Conditions So Easy?<\/span><\/p>\n

\n

Via Global Macro Monitor,<\/em><\/a><\/p>\n

The Fed\u2019s attempt to tighten monetary policy is being cannibalized by the private sector\u2019s accelerated easing of financial conditions through market-based financial instruments.\u00a0 The following chart is simply stunning.\u00a0 \u00a0<\/p>\n

Since the Fed began its monetary tightening campaign in March 2022, lifting rates from zero to 5 percent, overall national financial conditions have eased significantly, <\/strong>as measured by the\u00a0Chicago Fed\u2019s National Financial Conditions Index (NFCI)<\/a>.\u00a0<\/p>\n

<\/a><\/p>\n

The NFCI \u00a0is an index of a weighted average of 105 market financial indicators that cover a wide spectrum of the financial system, including the money markets, debt and equity markets, and the traditional and \u201cshadow\u201d banking systems.\u00a0<\/p>\n

Our quick \u201cblink<\/a>\u201d review of the NFCI, going back to early 1970s shows the Fed doesn\u2019t start cutting rates until there is a spike in the NFCI, which, given the weights in the index, usually occur with an adverse credit event.<\/strong><\/p>\n

<\/a><\/strong><\/p>\n

We believe this will be a major issue debated at the Tuesday\/Wednesday FOMC meeting between the doves and the hawks, and will most likely result in some hawkish rhetoric coming from Mr. Powell\u2019s post-meeting presser.\u00a0<\/p>\n

Seat belts?\u00a0\u00a0<\/strong><\/p>\n

Mr. Market is pricing close to a 50 probability of an interest rate cut in March<\/a>.\u00a0<\/p>\n

<\/a><\/p>\n

Zero chance, in our opinion,\u00a0 if the markets continue on the merry way.<\/strong><\/p>\n

As always, we reserve the right to be wrong, as we often are.\u00a0\u00a0<\/p>\n

Stay frosty<\/a>, folks.\u00a0<\/em><\/p>\n<\/div>\n

Tyler Durden<\/a><\/span>
\nTue, 01\/30\/2024 – 15:25<\/span><\/p>\n

\u200bRead More<\/a>\u00a0<\/p>\n

\u00a0<\/p>\n","protected":false},"excerpt":{"rendered":"

Can The Fed Cut Rates With Financial Conditions So Easy? Via Global Macro Monitor, The Fed\u2019s attempt to tighten monetary policy is being cannibalized by…<\/p>\n","protected":false},"author":0,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1],"tags":[],"class_list":["post-1454238","post","type-post","status-publish","format-standard","hentry","category-news","wpcat-1-id"],"_links":{"self":[{"href":"https:\/\/bugaluu.com\/news\/wp-json\/wp\/v2\/posts\/1454238","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/bugaluu.com\/news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/bugaluu.com\/news\/wp-json\/wp\/v2\/types\/post"}],"replies":[{"embeddable":true,"href":"https:\/\/bugaluu.com\/news\/wp-json\/wp\/v2\/comments?post=1454238"}],"version-history":[{"count":0,"href":"https:\/\/bugaluu.com\/news\/wp-json\/wp\/v2\/posts\/1454238\/revisions"}],"wp:attachment":[{"href":"https:\/\/bugaluu.com\/news\/wp-json\/wp\/v2\/media?parent=1454238"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/bugaluu.com\/news\/wp-json\/wp\/v2\/categories?post=1454238"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/bugaluu.com\/news\/wp-json\/wp\/v2\/tags?post=1454238"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}