Heading into the Fed decision, there are known knowns, and known unknowns.
It’s time to channel the former U.S. Defense Secretary Donald Rumsfeld, who once said, “There are known knowns; there are things we know we know. We also know there are known unknowns; that is to say we know there are some things we do not know. But there are also unknown unknowns — the ones we don’t know we don’t know.”
Tim Duy, chief U.S. economist at SGH Macro Advisers, says economists are more likely to see 2023 as the date of a first hike, given the strength of the actual economic data that have come in since the last dot plot was released in March. Traders, by contrast, emphasize the signaling aspect of the dot plot, and that Chair Jerome Powell won’t want to step on his own message about keeping policy loose until the U.S. jobs market shows significant recovery.
As for the unknown unknowns, they would probably come in the form of answers to reporter questions. It’s worth noting this chart, from Bespoke Investment Group, showing the stock market generally sells off as Powell speaks. Technology stocks haven’t kept up with the S&P 500 since September 2020, points out Jeff Buchbinder, equity strategist at LPL Financial, which downgraded its view on the tech sector to neutral.
Biden and Russian President Vladimir Putin meet in Geneva, Switzerland for a highly anticipated gathering between two leaders, who have been critical of each other. The WSJ dollar index BUXX, -0.08% is up a slender 1% this year. Copper futures HG00, +0.14% have climbed 24%, while gold futures GC00, +0.08% have slipped 2% in 2021.Here’s some infrastructure investment — in Peru, a 500-year-old bridge is being rebuilt by weaving.
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