Quote:
Originally Posted by IowaHawkeyeChief
They got really nervous with the negative GDP number... I think they decided it is better to have inflation with any positive GDP for the next quarter compared to having stagflation. In my opinion, neither option is very palatable. It will be an interesting 6 months with tons of uncertainty. Many folks have never seen 5% mortgage let alone 7%+ of the 10 year and up shift higher.
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No, this isn't right. The negative GDP number meant nothing. It was impacted in a major way by trade (imports over exports) and inventories. Final demand was incredibly strong. The Fed understands the composition and this wouldn't have concerned them at all (and the markets understood this as well and the GDP figure had no major impact).
The Fed isn't dovish by any stretch but there's a limit to the neverending hawkishness that the market needed to subscribe to.