We got lied to!!!
I tucked away this news release from May 4, 2022 and just found it. I think you'll "see" how we got lied to with todays' (June 15, 2022) .75 rate increase. (Not that it matters all that much, I guess. All politicians lie and all Gubment employees lie when they are expected to for the parties' greater cause IMO):
May 4 Powell commentary
Fed Chairman Jerome Powell is trying to slow down the economy without putting it in recession.
While the Federal raised its key policy interest rate by one-half percentage point as expected Wednesday, to 0.75%-1%, central bank chief Jerome Powell lowered future rate expectations by effectively ruling out larger increases of three-quarters of a point.
Stocks and bonds rallied sharply in reaction, with major equity averages jumping around 3%. Treasury yields, which move inversely to prices, fell sharply, especially for shorter maturities which are most sensitive to expectations of future Fed moves. In particular, the two-year note fell 16.2 basis points, to 2.638%, while the benchmark 10-year fell 3.5 basis points to 2.992%. (A basis point is 1/100 of a percentage point.)
Spurring the rallies in equities and debt markets was Powell’s comment that a 75-basis-point hike in its federal funds rate target wasn’t under active consideration. After some central bank officials had broached the idea of a bigger boost, markets had priced in a possibility of such a move at the next month’s meeting of the Federal Open Market Committee.
Now the fed funds futures market is pricing in 50-basis-point increases at each of the next three confabs, June 14-15, July 26-27, and Sept. 20-21. That would bring the Fed’s target range up to 2.25%-2.50%.
“Fifty is the new 25,” observes Vincent Reinhart, chief economist for Dreyfus and Mellon Bank and former economist and secretary at the FOMC. Until now, the Fed has moved only in quarter-point increments but Powell made clear that half-point moves were likely as it attempts to move monetary closer to neutral, a stance that neither stimulates nor slows the economy.
That was exactly what markets had been expecting, in keeping with the Powell Fed’s strong desire to avoid surprises, Reinhart added in a telephone interview. Also as anticipated, the FOMC announced the beginning of the reduction of the central bank’s massive balance sheet of nearly $9 trillion, which more than doubled in size since the initiation of its emergency policies during the pandemic-related emergency in March 2020.
The run-off in the Fed’s holdings will begin June 1, ramping up to $75 billion in monthly reductions by September. Reinhart calls the reduction in the Fed’s assets a sideshow as they will be gradually brought down to come to closer to the central bank’s key liabilities, bank reserves.
While the Fed has barely begun its normalization of policy–with only a 75-basis-point total increase in two steps from its near-zero level just a couple of months ago—Powell repeatedly referred to a tightening in overall financial conditions. That takes in bond yields and credit spreads, mortgage rates, and equity prices, which have all adjusted to the expectation of significant further central bank hikes. (He didn’t mention another factor, the strength of the dollar, which is the Treasury’s purview and not the Fed’s.)
Reinhart noted it wasn’t an accident Powell pointed to the two-year Treasury yield, which he said has risen all the way from just 0.20% to 2.80% (and coincidentally fell back to 2.65% as he spoke) as indication of the market’s anticipation of future Fed moves.
Powell also took the unusual step at the beginning of his presser to address the American people, essentially to reassure them that he feels their pain, Reinhart says. “He knows he has a problem” with the surge in inflation that has become Americans’ No. 1 concern. At the same time, the Fed chief wanted to reassure the public that policy would move toward neutral “expeditiously” albeit not immediately.
Reinhart also sees Powell wanting to avoid becoming the “anti-Volcker,” a reference to former Fed Chairman Paul Volcker who famously slayed the double-digit inflation of the 1970s with draconian interest rate increases.
At the same time, Powell “is not a single-minded inflation fighter,” he added. Powell emphasized the strength of the labor market, mentioning more than once the March job openings and labor turnover (JOLTS) data released Tuesday, which showed 1.94 job openings for every unemployed person. But there are a lot of plausible paths to recession, and if we see three monthly increases in this data, that would signal a slowing of labor demand and signal recession, Reinhart said.
In sum, markets emitted a sigh of relief that the Fed isn’t planning bigger rate hikes at coming meetings. At the same time, Powell emphasized much of the tightening of financial conditions needed to slow inflation has already been effected by the markets. In all, it adds up to a dovish tightening.
Sidebar: I love Agoura Guy's commentary on the SQQQ board about today's action and the PPT. I speak of it because had Powell raised the interest rate up 5.75 basis points this afternoon instead of just .75 bp ... 'betcha the PPT would STILL have jacked up the Nasdaq after the news got released. The PPT keeps things "interesting" I think. All IMO of course.
News 
Market Data 
Discover 
