U.S. Indices choppy on Friday, hindered by the Quadruple Witching Expiration with stocks ultimately closing mixed with outperformance in the NASDAQ 100 as Mega cap stocks caught a bid in the final minutes of trade. T-notes steepened with bonds chopping to the volatile risk environment. The Dollar outperformed while cyclical currencies lagged with Sterling under pressure ahead of the Spring Statement this week. There was little economic data to digest on Friday with the focus on the return of Fed speak after the FOMC blackout period. Waller explained the reason for his dissent against the balance sheet slowdown, while Williams and Goolsbee stressed a wait-and-see approach. Williams noted they are in no rush to adjust monetary policy. In Europe, the German Bundesrat passed the debt reform bill and EUR 500 billion fund, as was expected. On Geopolitics, Russia and Ukraine blamed each other for an attack on the Sudzha gas metering station in Russia’s Kursk region. In US, Nike (NKE), FedEx (FDX), Micron (MU) and Lennar (LEN) earnings disappointed but Boeing (BA) rallied after US President Trump awarded the company with the new fighter jet contract. Attention this week turns to treasury supply, Final Q4 US GDP and the February PCE data. Fed Governor Waller explained his reasoning for his dissent on the balance sheet at last week’s FOMC rate decision. The Governor voted with others to keep rates on hold, but he was against slowing the pace of the balance sheet runoff. Waller said he preferred to continue the current pace of the balance sheet decline, noting slowing or stopping the run-off will be appropriate as they get closer to an ample level of reserves, but in his view, the Fed is not there yet as reserve balances stand at over USD 3 Trillion, and this level is abundant. He added there is no evidence from money market indicators, or from his conversation that the banking system is close to an ample level of reserves. He believed the slowed run-off pace beginning in June 2024 continues to be the right one. Waller said the Fed has tools available to mitigate unanticipated market disturbances and should rely on these and develop a plan to respond to any short-run strains. He added that even with the new slower pace of runoff, a plan is still needed. New York Fed President Williams said the current modestly restrictive monetary policy is ‘entirely appropriate’; the current rate policy fits with a ‘solid’ job market and above-target inflation. The Vice-Chair reiterated his prior view that there are no signs inflation expectations are becoming unmoored. He added that data shows public believes near-term inflation climb will dissipate. On the balance sheet, Williams said it was a ‘natural step’ to slow the pace of the drawdown. Similar to Chair Powell, Williams said the Fed is not in a hurry to make the next monetary policy decision. With regards to the University of Michigan Survey, he said inflation expectations data is an outlier. Williams echoed the wait-and-see approach, highlighting the many different economic scenarios, noting it is hard to know of performance and the clear impacts of tariffs on inflation. Regarding growth, he expects it to slow in part due to lower immigration. Meanwhile 2025 Voter Goolsbee said when you have a lot of uncertainty you have to wait for things to clear up, and the current conditions are “maybe” a shock to the economy depending on how long they last. The Chicago Fed President added that before judging how monetary policy reacts to tariffs, Fed needs to know how long the tariffs last, the possible retaliation and pass through to consumers. On data, Goolsbee added a lot of the hard data is strong. Ahead, Goolsbee noted that waiting is not free, the longer you wait, the cuts when they come will be backloaded. Right now, Goolsbee said they have to wait amid tariff threats, but there can be a cost to waiting. Furthermore, the Chicago Fed President said a slowdown in the economy would be a reason to cut, and if inflation ticked up outside of tariffs, and inflation expectations rose, they would have to revise the outlook. Elsewhere, Oil closed 0.31% higher while a stronger Dollar saw Gold close lower by 1.1%.
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For anyone following my Platinum Service it made 1183 points on Friday and is now ahead by 2609 points for March after closing February with a gain of 4180 points. January ended with a gain of 2768 points while 1997 points were gained in December. October ended with a gain of 2179 points, after closing September with a gain of 4402 points, following a loss of 301 points in August. July gained 1908 points while June saw a gain of 2074 points. The Platinum Service made a record 9619 points in October 2022. Since I started this New Platinum Service in June 2015 it has averaged a monthly gain of over 1900 points. I have a YouTube Channel which contains recent interviews I have given This can be viewed by clicking HERE Please subscribe to this for new interview notification
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