Will the Fed will be forced to take its foot off of the brakes?
Macro Perspectives
On Wednesday Jerome Powell told us "I don't want to over tighten, and that's why we're slowing down." And he said there was still a path of a soft landing, without a severe recession.Â
As we know stocks had a huge day, now sitting on a downward sloping trendline (click here for yesterday's note with chart) heading into today's job report.
What markets are giving us clues that this line will resolve in a breakout (higher) in stocks?
Yields, gold and the dollar.
As of yesterday's close, Powell's speech and Q&A session has triggered more than a quarter point drop in the benchmark 10-year Treasury yield - this is now 85 basis points off of the highs of October.
Related to this, the dollar looks very vulnerable to a much deeper decline (this, after already falling 8% since late September).
And gold has been on a tear the past 24 hours and has now bounced 11% from the lows of just weeks ago.
What have these markets been telling us since putting in respective highs (dollar and yields), and lows (gold)? The Fed will be forced to take its foot off of the brakes. And that's what Powell indicated.
