Technical Analysis

Fed Daly to speak on FOXBusiness at the 1430 ET

The San Francisco Fed President Mary Daly is expected to speak on FOXBusiness news at 1430 ET.

Daly represents the first Fed member to speak post the FOMC rate decision on Wednesday. The Federal Reserve raise rates but 25 basis points as expected. She is also the first Fed member to speak after the much stronger than expected US jobs report today.

Recall that before the blackout., Daly had a lengthy interview with the Wall Street Journal. During an interview she said that she

  • expected economic growth in the labor market to continue to slow
  • that she expected inflation to come down.
  • However she did stress that the Fed is very data dependent.
  • She also said the core services inflation excluding housing was still elevated and not coming down
  • She said that it was reasonable/likely for rates to be 5% – 5.25%
  • She expected unemployment to rise to 4.5% – 4.6% (that was the central tendencies projection as well for 2023)
  • She said that to bring inflation down fast requiring enormous labor market pain

With the employment situation accelerating and not slowing down, it’ll be curious to hear how hawkish the Fed officials will sound starting with Daly and continuing into next week where more Fed officials will likely be chirping. I would not think that they would think of the number today as being a Goldilocks situation, but rather a more cautionary situation especially in regard to potential inflation. It is also likely to keep the Fed’s assessment that rates would stay elevated for longer more solid, and could lead to a higher terminal rate.

As each employment report comes and goes, and those reports continue to not show deceleration, but acceleration, the Fed will have to decide whether the “data dependency” has a disclaimer attached to it that excuses the strength given expectations that growth will eventually slow as a result of the hikes in the past, OR will it simply lead to more 25 basis point hikes until they see the “whites of a weakening jobs markets” eyes?

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