In addition to the hot January PCE print, the other surprise of last week was the upbeat flash PMI from S&P Global Market Intelligence (formerly IHS Markit) showing upside surprises from the G4 industrialized countries. Increasingly, the market narrative is shifting from a growth slowdown to no recession and continued growth. The markets are behaving the same way, as they turn to discounting a growth revival, led by a successful China reopening.
At the same time, last week's release of the February FOMC minutes warned, "Participants observed that a restrictive policy stance would need to be maintained until the incoming data provided confidence that inflation was on a sustained downward path to 2%, which was likely to take some time."
What should you do? Fight the tape, or fight the Fed?
The full post can be found here.
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