Last Words ๐Ÿ“ˆ

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Last Words

Just yesterday, we discussed how the Fed has given little to no indication that they are going to shy away from large rate increases. Even then, there was still hope that the picture would get a lot cleaner on Thursday, considering Chair Powell himself had a few words to say. The Cato Institute held their Annual Monetary Conference yesterday, and Powell was one of the speakers for the think-tankโ€™s meeting.

Powell was not afraid to speak his mind, and he mightโ€™ve given investors the answers that they were expecting. The consensus is that rates will increase by 0.75%, and Powellโ€™s tone at the conference all but confirmed this will be the case. Direct quotes include โ€œwe need to act now forthrightly, strongly, as we have been doingโ€ which puts the writing on the wall. According to many analysts and economists, Powell wouldโ€™ve hinted at a lower rate increase if that was in plan, and this was reflected in interest rate futures as they rose modestly after the speech. Powell cited empirics from the 1970s and 1980s when inflation was sky-high as the Fed quickly solved the problem to reduce negative public sentiment. He said that he doesnโ€™t want the public to expect inflation to rise, and instead look for it to decrease as that will help ease the issue in its own way. One thing he acknowledged is that itโ€™ll be hard to gauge the economy in a medium-term lens due to the rise in interest rates, and it truly feels like the Fed is willing to let the economy tip over to fix this problem that some argue was caused by their inaction.

I am not a financial advisor and my comments should never be taken as financial advice. Investments come with risk, so always do your research and analysis beforehand.

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Market Recap โ€“ September 28th ๐Ÿ’ฐ

After the 10-year Treasury yield bond fell off from its 15-year high, investors added some value back into the market, focusing all short-term attention on Fridayโ€™s PCE price index reading.

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