June 2024 FOMC Debrief

Hello my friends, so we just had the June FOMC meeting, so this is my FOMC debrief. Now before we get into what happened, let's level set a little bit. So today was a June meeting and these quarterly meetings are special because we got a dot plot. Now the last time we got a dot plot was in March and at that time the Fed guided towards three cuts this year. However, between then and now inflation has not declined as expected. It's actually been pretty sticky, so Chair Powell a few weeks ago made it a point to tell the market that he's not happy with progress on inflation. So the market adjusted accordingly. Now this morning we got a CPI print, it was better than expected and heading into this meeting then the market was pricing in two cuts this year.

你好，我的朋友们，我们刚刚举行了6月的FOMC（联邦公开市场委员会）会议，现在我要做一个FOMC会议回顾。先让我们简单回顾一下背景。今天是6月份的会议，这些季度会议特别重要，因为我们得到了一个“点阵图”。上一次我们得到“点阵图”是在3月份，当时美联储预测今年会有三次降息。然而，从那时到现在，通货膨胀并没有按预期下降，实际上一直比较顽固。所以几周前，鲍威尔主席特意告诉市场，他对通胀的进展不满意。因此，市场做出了相应的调整。今天早上我们得到了一个消费者价格指数（CPI）的数据，数据好于预期，所以在这次会议前，市场预期今年会有两次降息。

Now the dot plot we got this time around I think it was pretty hawkish and certainly much more hawkish than I expected. I was expecting along with the market two cuts to be priced in for the rest of the year. However, the June dot plot actually only has one cut and in addition to that a couple other changes were made as well. So first the Fed revised its long-term mutual rate upwards from 2.6% to 2.8%. So the new short rate is basically a standard by which the Fed judges how restrictive it is. So when policy is above the new trade that means that the Fed is trying to slow down the economy. When policy is below the new trade that means the Fed is being accommodative and giving a tailwind to growth and inflation.

这次我们看到的点阵图我认为相当鹰派，肯定比我预期的更鹰派。我之前和市场的预期一样，认为今年剩余时间会有两次降息。然而，6月的点阵图实际上只显示一次降息，此外还有其他一些变化。首先，美联储将长期中性利率从2.6%上调至2.8%。新的短期利率基本上是美联储用来判断政策限制程度的一个标准。所以当政策高于新的利率时，这意味着美联储试图放慢经济增长。当政策低于新的利率时，这意味着美联储在采取宽松政策，推动经济增长和通货膨胀。

Now by revising upwards the new trade from 2.6 to 2.8%, the Fed is saying that you know actually I'm not as restrictive as I thought and which might be why they're only projecting one cut this year simply because it seems like the economy is more resistant to interest rates than they previously thought. Now to be clear when you look at the market the market is pricing in a neutral rate and about 3.8% and so the Fed is I think 2.8% is still far below the market and far below my personal expectations of where the new short will be. But slowly though over the past few meetings the Fed has been revising that upwards.

通过将新的贸易数据从2.6%上调到2.8%，美联储实际上是在表明他们比之前想象的要不那么限制性，这也可能是他们今年只预测一次降息的原因，因为看起来经济对利率的抗性比他们之前预想的要强。需要明确的是，市场目前定价的中性利率大约是3.8%，而美联储认为的2.8%仍远低于市场预期，也低于我个人对短期利率的预期。不过，逐步来看，在过去的几次会议中，美联储一直在上调这个预期。

Now the second thing that they changed that I thought was noteworthy was they revised the neutral or the long-term unemployment rate upwards from 4.1% to 4.2%. Now I think this is pretty hawkish as well. Now the way that the central banks look at monetary policy they usually view it as having a trade-off between employment and inflation. So for example the Fed could hike rates significantly so the economy down and get inflation under control but the side effect to that would be higher unemployment. Now today the unemployment rate is 4%.

我认为值得注意的第二个变化是，他们将中性或长期失业率从4.1%上调到了4.2%。我觉得这也是一个较为强硬的信号。在中央银行看待货币政策的方式中，通常认为就业和通胀之间存在一种权衡。例如，美联储可能会大幅加息，从而让经济放缓并控制通胀，但这样做的副作用是失业率会上升。当前的失业率是4%。

Now by revising up the Fed's perceived long-term unemployment rate to 4.2% that means the Fed thinks that there's still some room unemployment can arise before we get to that part where the trade-offs become harder because right now unemployment rate is still below where they think the long-term rate would be long-term unemployment rate would be. So all in all I thought this was a hawkish hawkish dot plot. Now what surprised me though is that the market didn't really seem to care and now usually with this kind of hawkish structure we would expect that the equity market to sell off and we would expect interest rates to rise.

现在美联储将他们认为的长期失业率上调至4.2%，这意味着他们认为在达到那种比较难权衡的状态之前，失业率还有一些上升空间。因为目前的失业率仍低于他们认为的长期失业率。所以总体来看，我认为这是一个鹰派的预期计划。不过让我感到惊讶的是，市场似乎并不在意。通常在这种鹰派的情况下，我们会预计股市下跌，利率上升。

But we didn't really see any of that I think towards the end of the session yeah we got some declines in equity markets and it looks like the interest rates rose a little bit but it wasn't a very strong reaction. So I'm getting the sense that the market is not placing too much weight on the dot plot and is thinking that you know the Fed the data will change and the Fed would change as well and maybe the market has its own view on data. Now to be clear as Chipau noted now the dot plot reflects data up to this morning so the good CPI print is also incorporated. During the press conference I thought it was not too interesting it was seemed you know the Chipau seemed a bit flustered I didn't didn't get the sense that there was a very coherent message.

但是，我认为我们并没有真正看到这一点。接近会议结束时，我们确实看到股市有所下跌，利率略有上升，但反应并不强烈。所以我感觉市场并没有把太多的权重放在点阵图上，他们认为美联储会随着数据的变化而调整，可能市场有自己对数据的看法。需要明确的是，正如Chipau所指出的，现在的点阵图反映了今早的数据，因此也包括了良好的消费者价格指数（CPI）数据。在新闻发布会上，我觉得没什么特别有趣的，Chipau似乎有点慌乱，我没有感觉到有什么连贯的信息。

His message that I thought that stood out the most to me was you know if you want ray cuts two paths same thing he said last time we need to have more confidence on inflation coming towards 2% target or we have an unexpected loosening of the labor market which as I've been writing is my expectation. One interesting thing from the from the press conference was a reporter asking Chipau basically you know what would happen if you cut rates one time why don't you just cut it. Let's listen to his reaction.

他的信息中，我觉得最突出的一点是，如果你希望降息，那就需要满足两个条件：一是我们对通胀回落到2%的目标有更多信心，二是劳动力市场出现意料之外的松动。而我一直认为第二种情况是最有可能发生的。在新闻发布会上有一个有趣的点，一位记者问鲍威尔，如果你们只降息一次，会发生什么？为什么不就降一次息呢？让我们听听他的反应。

A lot of focus on how many cuts could be expected this year but can you give us a sense of what one cut by the end of the year would actually do to the economy what you think would be a meaningful difference if there was a cut by the end of the year or even two. So that's not how we look at it you know really the whole rate path matters and I do continue to think that when you know when we do start to loosen policy that will show up in a significant loosening in financial market conditions and the market will price in what it prices in I don't I have no way of saying we're not at that stage so I don't know.

今年可能会有多少次降息备受关注，但您能否说明如果今年年底前确实进行一次降息，这对经济会产生什么实际影响？如果年底前有一次或甚至两次降息，您认为会带来哪些显著的变化？ 这不是我们看问题的方式。实际上，整个利率路径都很重要。我确实继续认为，当我们开始放松政策时，这将显着反映在金融市场条件的宽松程度上，而市场会自行调整。我无法确定具体情况，因为我们还没有到那个阶段，所以我也不知道。

Basically Chipau was saying that you know if I cut rates everything was surged we're going to crash up and you know I got to be careful when I do that but the thing is I think everything is surging in anticipation of your first cut and when you actually cut maybe things accelerate. Alright so that's all I have to say about the FOMC press conference. Surprisingly I think Hockish but also surprisingly not that influential on markets today. Alright talk to you all this weekend.

基本上，Chipau 的意思是，如果我降息，一切都会飙升，然后我们会陷入崩盘。所以我在降息的时候必须非常小心。但是，我认为现在一切都在提前上涨，以期待你第一次降息，而当你实际降息时，这种上涨可能会加速。 好了，这就是我对联邦公开市场委员会新闻发布会的所有看法。我感到意外的是，这次发布会的立场有一些强硬，但却对今天的市场影响不大。好了，周末再和大家聊。