FED SPEAK PRIMER: No speakers due until after US CPI on Wednesday

Analysis details (13:00)

DATA DEPENDENT: After the hot jobs report on Friday attention now turns to clues from the Fed to gauge appetite for another 75bp move in September and to see how high the Fed is willing to go, and for how long. The strong jobs report helped put to rest fears of a recession after the two consecutive quarters of contraction given the very strong labour market. However, with US CPI released on Wednesday, this will likely have more influence on the Fed so we will hear more Fed speak towards the end of the week - Fed's Evans and Kashkari are due on Wednesday after the CPI report while Daly is to speak on Thursday and we will likely have more unscheduled speakers. Although the July jobs report was hot, there is a lot of data to digest from now until the September meeting (see below). The 21st September FOMC will see the release of the updated Summary of Economic Projections, which will be key to determining how much the Fed's reaction function has been influenced by the data, mainly to see if the rate path is more aggressive than predicted in June, or less aggressive, but all will be dictated by the upcoming data.

RECENT SPEECHES: Fed speak has been hawkish since the dovish reaction to the June FOMC and the July jobs report will likely only embolden the hawkishness. Over the weekend Fed's Bowman said the Fed should consider more "similar sized" rate hikes at coming meetings in order to bring high inflation back down to the central bank's target and that she will let the data guide her on how big rate hikes need to be at coming policy meetings. Meanwhile, Fed’s Daly (2024 voter) said the “Fed is far from done yet” on lowering inflation and that they need to leave their minds open, while she suggested that a 50bps hike is not the only option on the table. 

KEY UPCOMING DATA POINTS 

• US CPI (July): Wednesday 10th August.


• US PCE (July): Friday 26th August.


• US NFP (August): Friday 2nd September.


• US CPI (August): Tuesday 13th September.


• US FOMC: Wednesday 21st September.


• US PCE (August): Friday September 30th.

08 Aug 2022 - 13:00- Fixed IncomeData- Source: Newsquawk