FED Pause Likely
The expected June and July hikes of 50 basis points each have already been priced into the markets. I believe that if tomorrow’s job report shows a slower job number and confirms that the economy is already slowing, the FED will pause after those two hikes, until the election. Of course, they won’t be announcing a pause until the July meeting at the earliest and more likely, either the Jackson Hole conference in August or the actual September meeting. The timing will probably depend on how the stock market is doing. That is probably the agreement reached when Powell met with Biden and Yellen on Tuesday. If it plays out, gold and silver, are going to have a great summer as I have been posting they, especially silver, were going to have a good June and July. Only two days in and things are heating up.
More important to the stock market than interest rates, I believe, is the Fed starting QT – reducing its balance sheet. “Don’t fight the Fed” works in both directions.