The Federal Reserve Remains Hawkish, Inflation Is Slowing, China’s Shifting Covid Policies
December 15, 2022 | FIRESIDE CHARTS
The Federal Open Market Committee (FOMC) surprised markets by releasing economic and rate hike forecasts that are out of line with current consensus. The committee seems convinced that unemployment must rise to fully stamp out inflation. Such hawkish posture seemed out of touch following another constructive inflation report. Households dipped into their savings to fund consumption earlier this year, but the rate of spending is slowing as indicated by lower-than-expected retail sales. Gas prices continue to fall. China seems serious about ending Covid restrictions. What will the future of energy look like?
1. FOMC members expect to raise rates higher for longer, at odds with current market expectations:
2. An overshoot on unemployment would have major consequences for millions of Americans:
Source: TS Lombard
3. Recent month-over-month inflation has returned to a more normal cadence:
Source: Daily Shot 12/14/2022
4. Excluding shelter, core CPI has turned negative:
Source: Calculated Risk
5. Consumers are generally reluctant to spend down savings:
Source: BCA Research
6. But if consumers expect to remain employed then they may plan to save more money in the future:
Source: Daily Shot 12/12/2022
7. Gas prices are now down on a year-over-year basis:
Source: Daily Shot 12/12/2022
8. Increased vaccine uptake is evidence that China’s Covid policies are changing:
Source: TS Lombard
9. It is still a long shot, but we’re one step closer to viable net gain nuclear fusion:
Source: @financialtimes Read full article
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