IS BAD GOOD?

According to the Beige Book, economic growth prospects are weak and set to slump further over the next year, while price growth showed signs of decelerating. The Beige Book is the statistical compilation utilized at the upcoming Fed meeting.

The Beige Book stated price levels “remain highly elevated” but nine districts reported some degree of moderation in their rate of increase.

The equity advance gained momentum on the belief the worst in inflation is behind us. Treasuries across the spectrum also rallied.

Is this nothing other than rebound from deeply oversold levels?

Next week is the blackout period before the September 20 FOMC meeting thus suggesting upcoming data may have an outsized impact.

Speaking of which Fed Vice Chair Lael Brainard stated yesterday , “Monetary policy will need to be restrictive for some time to provide confidence that inflation is moving down to target.” Her comments are similar to statements made by other officials and perhaps will not be different than any comments that may be made today by FRB Chair Powell.

What will happen today?

Last night the foreign markets were mixed. London was up 0.27%, Paris up 0.36% and Frankfurt down 0.28%. China was down 0.33%, Japan up 2.31% and Hang Seng down 1.0%.

Futures are little changed as some attention is focused upon how aggressive the ECB will be in the fight against inflation when it announces its interest rate decision later. The 10-year is up 4/32 to yield 3.25%.

 

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