MBS RECAP: Calmly Basking in Post-Fed Glow

Posted To: MBS Commentary

Today gave markets a chance to continue reflecting on the realities of yesterday's FOMC Announcement. The Fed broke new ground by including the global macroeconomic risks to inflation. In other words, the Fed might have hiked if they didn't see global developments posing a problem for inflation. The takeaway is that the Fed can no longer say "we expect inflation to pick back up," without relying on the global macroeconomy to similarly pick back up. That's much more "picking back up" than they were hoping to see when it was just about domestic inflation! Of course the logic is that the global economy is preventing domestic inflation, and that can make some sense. But whether it does or it doesn't, the Fed is essentially saying "we don't have enough...(read more)

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