July 2023 FOMC Debrief

Hello my friends, today is July 26th. My name is Joseph and this is my July FOMC debrief. Now, I'm going to briefly go over what I thought was most interesting about today's FED conference. But before I do that, I want to level set so we all know how we got to a re-yard today.

大家好，今天是7月26日。我叫约瑟夫，这是我7月份的FOMC总结。现在，我将简要回顾一下我认为今天的美联储会议中最有趣的地方。但在此之前，我想给大家一个共识，让我们都知道我们是如何进入到今天的这个阶段的。

So, let's back up a little bit in June, the FED paused. So, for the months preceding June, the FED had been a hiking race at every meeting and in June they decided to pause. Now, they paused but they also gave guidance that they would high-grade two more times this year. Now, between June and July, we had economic data that was broadly stronger than expected and we also had inflation, notably the recent CPI print that was lower than expected. Now, going into this meeting, FED speakers had broadly telegraphed that July is going to be a meeting where we hike rates and that is exactly what happened today and brings us to where we are today.

所以，让我们回到六月的一点点。美联储在此之前几个月一直在每次会议上加息，但六月份他们决定暂停加息。他们暂停了，但也表明他们今年将再度加息两次。在六月和七月之间，我们得到的经济数据普遍比预期强劲，而且还有通胀，尤其是最近的消费者物价指数（CPI）数据低于预期。在这次会议之前，美联储发言人广泛表明七月份将会加息，而今天也正是如此，这就是我们今天所处的位置。

So, the FED obviously does not like to surprise the markets and hiked rates. Now, in this meeting, people were looking for extra information as to whether or not the FED would continue to hike rates. Many people noted that very soft CPI print and the market has begun to think that the FED maybe is done with this rate hike cycle. Chair Powell addressed that pretty directly and said that that's only one data print. We look at a whole bunch of stuff and maybe if we continue to see really soft CPI prints that would change our mind but right now we're going to be very data dependent, which is totally fair. After all, this economic cycle has not been as anticipated, so it makes sense to be as Chair Powell would say humble and nimble.

所以，美联储显然不喜欢对市场进行意外的调整并提高利率。在这次会议中，人们希望获得额外的信息，以确定美联储是否会继续提高利率。许多人注意到通胀数据非常疲软，市场已经开始认为美联储可能已经结束了这一轮加息周期。鲍威尔主席直截了当地回应说，这只是一个数据点。我们会关注各种因素，并且如果我们继续看到非常疲软的通胀数据，那可能会改变我们的想法，但目前我们会非常依赖于数据，这是完全公正的。毕竟，这一经济周期并不如预期，所以像鲍威尔主席所说的保持谦卑和灵活是有道理的。

So, there really wasn't any clues as to how the FED would behave next, other than the fact that between this meeting and the next meeting at September, the FED is going to be able to see a lot of data on wages, on GDP, on labor market and so forth. So, I think this is going to make for volatile trading whenever those key data prints are out.

所以，实际上并没有任何线索能够揭示美联储下一步的行为，除了一个事实，那就是在这次会议和9月的下次会议之间，美联储将能够看到大量关于工资、GDP、劳动力市场等方面的数据。因此，我认为每当这些关键数据出炉时，交易市场将变得波动不定。

Now, all in all, I think today's meeting was pretty boring simply because Powell didn't really give any too much new information. But there were some interesting things. Now, the first interesting thing, of course, is that the FED staff are no longer forecasting a recession this year. And you can see that in the FED statement as well, where they slightly upgraded their assessment of the economy from economic growth from, I think, modest to moderate. So, that's slightly more. I wouldn't read too much into it, but it's a slight acknowledgement that economic growth has been better than expected.

总的来说，我认为今天的会议相当无聊，因为鲍威尔并没有提供太多新的信息。但是也有一些有趣的事情。首先，有趣的事情之一是美联储的工作人员不再预测今年会出现衰退。你也可以在美联储的声明中看到这一点，他们对经济增长的评估稍微提升了，我想从温和到中等。所以，这有些微的提升。我不会过多解读，但这是对经济增长超出预期的轻微承认。

Now, the way the FED works is that every FED president and FED governor, they have their own view and they vote according to it and they have their own people as well. But the Federal Reserve Board, of course, they have their team of professional, full-time staff economists that have their view as well. And their view over the past few FED meetings was that we're going to have a recession sometime later this year. Of course, these are also the same people who were telling us that inflation was transitory, so keep that in mind. Now, it seems like, more recently, as of this meeting, the FED staff has thrown in a towel and they are also no longer forecasting a recession this year as well. The end of the economy is stronger than expected. And if you listen to my prior videos, there is some indication from my perspective that maybe we kind of had a recession last year when we had two quarters of negative GDP growth. And maybe we're re-excelerating right now, which we seem to be. Okay, so stronger than expected economic growth. That's one thing I noted.

现在，美联储的工作方式是，每个美联储主席和美联储行长都有自己的观点，并根据自己的观点投票，他们也有自己的团队。但是联邦储备委员会当然也有由专业的、全职的经济学家组成的团队，他们也有自己的观点。在过去几次美联储会议上，他们的观点是我们今年晚些时候会出现衰退。当然，这些也是告诉我们通胀是暂时性的同一批人，所以请记住这一点。现在，似乎更近期，从这次会议开始，美联储的工作人员也放弃了这一年的衰退预测。经济增长超出预期。如果你听过我之前的视频，从我的角度来看，去年我们经历了两个季度的负GDP增长，可能意味着我们经历了一次衰退，而现在我们似乎正在重新加速增长。所以，经济增长超出预期，这是我注意到的一点。

The other thing that I noted is a little bit more wonky is that the FED is open to both cutting rates and conducting quantitative tightening at the same time. Now, traditionally speaking, the FED doesn't like to do things that might confuse the public. So if they're high in rates, they want to be shrinking the balance sheet. If they're cutting rates, they want to be doing QE. So you have two tools. You have hiking the interest rates as one tool and you have the balance sheet as another tool. You want the two tools to be going in the same direction. Otherwise, the common thought was that you would be stepping on the acceleration and the break at the same time. So you didn't want to do that.

我注意到的另一件有点奇怪的事情是，美联储同时对降息和量化紧缩持开放态度。传统上，美联储不喜欢做可能会使公众困惑的事情。如果利率较高，他们想要缩减资产负债表。如果降息，他们想要进行量化宽松。因此，你有两个工具。一个是利率上升作为一个工具，另一个是资产负债表作为另一个工具。你希望这两个工具朝着同一个方向发展。否则，普遍观点是你会同时踩油门和刹车。所以你不想这样做。

But Chair Powell today, he was open to basically saying, next year, we could cut rates and we can let QT continue to do that.

但鲍威尔主席今天表达了这样的意思，明年我们可以降息，并且可以让量化紧缩继续进行。

that. QT continue That has been my view as well. I gave our interview most recently with MNI News saying that that seems to be the direction we're headed towards.

那就是我的观点。我最近接受了MNI新闻的采访，表示我们似乎正在朝那个方向发展。

And Chair Powell, again, this would be totally new for the FED, but it's open to it as well.

尊敬的鲍威尔主席，这对美联储来说将是全新的经验，但它也持开放态度。

And if you're super in the weeds, this actually has some interesting implications for both overall baking sector liquidity as well as interest rates. Because if you're open to doing quantitative tightening, even as you cut rates, then that means QT can go on for quite some time.

如果你对细节非常熟悉，这实际上对整个烘焙行业的流动性和利率有一些有趣的影响。因为如果你愿意进行数量收缩，即使降低利率，这意味着QT可能会持续相当长的时间。

That's a lot less liquidity in the financial system. And that means, of course, there's going to be more treasury issuance that the market has to absorb. So it suggests that interest rates upward pressure on that.

这意味着金融体系的流动性大大减弱。当然，这意味着市场必须吸收更多的国债发行。因此，这暗示着利率会面临上升的压力。

And I think that's really all that I thought was super interesting in this meeting. So brief, very brief debrief today.

我认为这次会议中，我觉得最有意思的就是这些，只有这些。所以，今天的总结非常简短。

And we'll talk again this week with my weekly markets weekly marketing on Saturday.

这周六，我会通过每周市场营销的方式与大家再次交流。

All right, talk to you guys soon.

好的，很快就会与你们交谈。