What is the Fed thinking?
Will they or won't they? On the one hand, we have the highest core inflation readings in decades. On the other hand, commodities like lumber have clearly broken as the supply chain gets sorted out. Will the Fed tighten policy?
Inquiring minds want to know. What do you think?
My own view is that the Fed is looking firmly behind, so they will weigh the core inflation reading heavier than the lumber futures data. If that triggers a Fed tightening cycle, we expect the economy to decelerate at the same time the supply chain gets sorted out. That means shortages will quickly become gluts. Wednesday afternoon should be interesting (that’s when Fed Chairman Powell gives his press conference.)
Robert Lloyd, CFA®
Chief Investment Officer
Lloyds Intrepid Wealth Management
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