Dont be surprised if Powell gets more hawkish and sends us to goblin town

There’s romance in the air with the thought of a 25bps rate hike coming tomorrow with the Fed funds futures pricing in a 99.1% probability.

Theres an important thing to remember though which is the press conference. This is where the action has typically happened and where Powell has ultimately flexed his big bulging muscles as Fed Chair. Rate hikes wont do the trick anymore if they wanna keep the market from jumping the gun and trying to get ahead of monetary policy, so Powell will likely rely on his microphone to keep liquidity at bay. Dont be surprised if Powell comes out incredibly hawkish. The Fed “toolbox” is actually quite limited, and it will be up to him to stamp out big rallies and limit market leverage. He is really the “tool” that can’t be fully priced in.

Markets have rallied with the prospect of looser monetary policy, starting to see convincing evidence of better financial conditions. Though rates may stay elevated for awhile a pause could be upon us, Fed Governor Waller let it slip that “to pause, i’d need 6 months of data not 3” which gives us an idea of how the Fed kind of quantifies sufficient evidence (6 months is almost upon us).

TLDR; Powell will likely be hawkish in his presser because an optimistic JPow means markets rip, “faux-hawkish” is the term ive been hearing.

Its my cake day please be nice and let me ramble i know i dont know shit about fuck and this may not even matter. Markets could have already priced in a hawkish Powell knowing its just lipservice for all we know.