Fed Schism, GBP Down as GBP Backs off
This week has been all about Fed talk and the debate about signaling rate hikes sooner rather than later. Atlanta Fed President Bostic weighed in saying he was one of the dots forecasting a hike in 2022 and two more in 2023.
It's important to note though that he won't be a voter in either of those years. Much of the hawkish commentary has been led by regional presidents while the 6 Fed governors along with permanent voter NY Fed President Williams are on the patient side. Powell will govern on consensus but there's little chance of the FOMC being bullied. In addition, Biden will presumably nominate another dove to fill a Fed vacancy later this year.
The market generally treaded water Wednesday but the Australian dollar did rise back above the key 200-dma. One asset that is struggling to find traction after the rout is gold, which isn't benefiting at all from the ebb in rate-hike fears.Looking ahead, the economic calendar remains busy headlined by the May prelim durable goods orders report. There is little question about the strength of the sector and that was underscored again by the record in the Markit manufacturing PMI on Wednesday. The only issues it outlined were difficulties in finding workers and raw materials.
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