Back to the drawing board for the Federal Reserve according to William Dudley… it’s time for the Federal Reserve to “rethink” inflation models which are failing to support further rate hike adjustments within their “Model.”
The ECB press conference last night was interesting – Mario Draghi was congratulated on his recent birthday nay one reporter… she then turned to a series poignant questions regarding Asset purchases – which were skirted.
The tough questions found rambling and often quite absurd pronouncements of stability and crisis management. Greece and Cyprus have been abandoned, their collective economies have been left for dead.
October, according to Draghi, is where it all lines up… They will begin to announce their intentions in this timeframe.
Draghi very briefly discussed the Euro’s strength and potential effects on exports and inflation targets, there was nothing specific.
Nothing aggressive, concrete or remotely indicative of future Policy – other than continued Liquidity injections with laser like focus to project control over Member Bond Markets.
I suspect the 125 level will be about it by October, it’s been an open target and one that leads the DX to 86-88 potential.
The Euro is up 14.3% this year, a very large move – the Yuan has reversed and is making new highs.
The long end of the curve had a very large imbalance yesterday – Bonds were halted. A noticeable and telling sign arrangements are being shuffled rapidly.