A high hurdle for the Fed to sound dovish (make a potential December rate cut great again)

Via a note from Macquarie on Monday, views on what it’ll take to bring a rate from the Federal Open Market Committee (FOMC) back to the table, and more.

Analysts at the bank argue that given there have been three consecutive consumer-price index reports showing upside, it’ll take a good-sized miss on the data this week from the US to turn around the more hawkish sentiment from the Fed and put a December rate cut back in play:

  • Thursday’s US GDP data
  • Friday’s US PCE inflation index

Either or both need to miss:

  • “The hurdle for the Fed to reverse its tone and sound dovish again is a high hurdle, for now”

On stocks, Macquarie point to “two dynamics at work behind the better tone in global stock markets”

  • decline in gold and oil prices
  • steadiness of the USD rather than a continued rise

“For one, concern over a spreading regional war in the Middle East has faded. The movement away from a wider conflagration, and back to a shadow war is probably why US bond yields are higher today.”

Not much of a respite from USD strength, but its what we have:

This article was written by Eamonn Sheridan at www.forexlive.com. Source