- The Fed has already engineered a soft landing by ending QE, argues Tim Duy, noting the moderation in inflation expectations, flattening yield curve, rising dollar, cratering oil, and flattening employment gains and GDP growth.
- Any further tightening of policy like higher interest rates, therefore, risks pushing the economy into recession.
- The Fed staff seems to agree with Duy (and markets) - something we know from the accidental release of their forecasts a couple of weeks back. Most of the FOMC members, says Duy, seem more interested in just getting short rates back to what they perceive to be a normal level.
- "The FOMC is on thinner ice than members realize because they don't believe they have already tightened policy ... They just don't know it, or won't admit it."
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