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Please consider a Sea Change in U.S. Monetary Policy by James Bullard.

Key Themes

  1. "Starting in January 2019, the Federal Open Market Committee (FOMC) made significant adjustments to the path of U.S. monetary policy."
  2. "These changes were made in anticipation of slower growth in the U.S. economy during 2019 and also in anticipation of continued uncertainty regarding global trading arrangements."
  3. "While additional policy action may be desirable, the long and variable lags in the effects of monetary policy suggest that the effects of previous actions are only now beginning to impact macroeconomic outcomes."
  4. "Meanwhile, inflation pressures remain muted, and a more meaningful inversion of the yield curve continues to threaten."

Bullet point three is the most interesting one.

Bullard has been one of the biggest doves on the Fed, but suddenly he adopted a wait-and-see attitude.

No doubt he is attempting to contain a bond market that expects three to four more rate cuts.

Bullard's Minimal Success

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Chart from CME Fedwatch with my "was" anecdotes.

Even if we attribute today's move entirely to Bullard, a risky proposition, his speech accomplished little of his clear intent.

Fed GDP Projections

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No Recession Through 2022

The median Fed projection is no recession as far as the eye can see.

Anyone believe that?

BS "Partial Inversion" Explanation

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Yield Curve Spreads

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Bullard says "The 10-year yield remains above the two-year yield, likely because markets are anticipating future policy moves by the FOMC, and so we are not seeing an intensification of the yield curve inversion so far."

What a sorry joke.

Mike "Mish" Shedlock