Fed's Williams (voter) Q&A: Seeing markets respond to Middle East changes; CPI print was consistent with what he is hoping to see over the coming months; CPI was a "little piece" of inflation run rate returning toward goal

Inflation

Risks to energy price inflation are somewhat less.
'Absolutely' not any consideration to changing 2% target; it is the right number and don't want to move the goalposts.

Rates/Policy

Don't have a clear direction about which way interest rates are going or when.
Was very strong support for the move away from forward guidance.
Mortgage rates are very tied to 10-year treasury yield, which is being lifted by expectations for strong US growth.
When inflation comes back to 2%, would expect rates to move down somewhat to more normal levels.
A lot of people are still sitting on low mortgage rates, will take a few years to resolve.
Expects rates to eventually move down with inflation.

Balance Sheet

Roughly in range of ample reserves; "now in steady as she goes mode".
There are parts of the balance sheet moving ahead organically and we are just meeting that demand.

Economy

Seeing an explosion of new businesses in the US.
There is a lot of dynamism in US economy.
Default rates have stabilised at pre-pandemic levels over the past year.
Broader consumer credit is growing consistent with the economy.
K-shaped economy is real.

What our latest note said

US Market Open, 21 Oct, 10:29 UTC · what it led with

Pakistan Army Chief Munir brought the "final warning" from the United States to Iranian officials, which called on Iran to submit to the US demands for concessions on the nuclear issue before taking any other steps.

The UK government has approved the Jackdaw North Sea gas field.

Headlines that moved markets

Headlines from our feed, and what the market did next.

Riksbank maintains its rate at 1.75% as expected; assesses that the probability of a rate increase later this year remains; there is considerable uncertainty and developments call for vigilance

EUR/SEK+0.3%

Norges Bank maintains its rate at 4.25% as expected; may still become necessary to raise the policy rate

EUR/NOK+0.6%

Iran and US talks continue, and reports that the deal is close are wrong.

WTI crude+1.5%

See all 183

Fed's Williams (voter) Q&A: Seeing markets respond to Middle East changes; CPI print was consistent with what he is hoping to see over the coming months; CPI was a "little piece" of inflation run rate returning toward goal

Inflation

Rates/Policy

Balance Sheet

Economy

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