FOMC Debrief November 2023

This is Joseph and welcome to my November FOMC debrief. So first, I'm going to level set as to what happened since the last meeting. Secondly, I'll talk about the markets reaction to today's meeting. And lastly, I'll talk about a few things that I found interesting.

大家好，我是Joseph，欢迎来到我关于11月FOMC会议的简报。首先，我将解释一下自上次会议以来发生的情况。其次，我将讨论市场对今天会议的反应。最后，我将谈一谈我发现有趣的几件事情。

First, let's level set. So the last time we had a Fed meeting was in September and September was one of those special meetings where we got a dot plot. The dot plot at that time guided towards one more rate hike this year. But between then and now, some pretty important things have happened. Specifically, we've seen long-aditated treasury yields rise significantly. The 10-year skyrocketed to 5%.

首先，让我们进行一次水平调整。上一次联邦储备会议是在九月份，那是一次特殊的会议，我们得到了一份点图。当时的点图指导我们今年还会再加息一次。但在那之后到现在，发生了一些非常重要的事情。具体而言，我们看到了长期积压的国库收益率大幅上升。10年期的收益率激增至5%。

And during the inter-meeting period, we had a few Fed speakers point towards the rise in long-aditated yields and note that financial conditions have tightened and to some extent, that may substitute for further rate hikes.

在会议间隙期间，我们有几位美联储发言人指出长期期限收益率的上升，并指出金融条件已经收紧，在一定程度上可能替代进一步的利率上调。

Now heading into today's meeting, the market was not expecting any Fed action today. And indeed, the market only prices in some probability of another rate hike in December or early next year. What I think the market was most interested in understanding today was how Chair Powell was thinking about the rise in longer-dated yields. Since that, I think holds the key to the future path of policy.

在今天的会议中，市场并不期待美联储今天采取任何行动。实际上，市场只对12月或明年初可能进行的另一次加息抱有一定的预期。我认为市场今天最感兴趣的是了解鲍威尔主席对长期收益率上升的看法。因为我认为这将决定未来政策的路径。

Now that the meeting is over, when we look at price action, it's pretty clear that the market interpreted this meeting to be dovish. Now, if you look at short-term interest rate futures before and after the meeting, you note that after the meeting, market participants guided towards priced in a lower expected path of Fed policy. So the market is less convinced of the strength of the higher for longer mantra, which the Fed has beat into the market over the past two years.

现在会议已经结束，看价格行动来看，很明显市场解读这次会议是鸽派的。现在，如果你观察会议前后的短期利率期货，你会发现会后市场参与者倾向于对联邦政策预期路径进行更低程度的定价。因此，市场对于过去两年中美联储深耕市场的长期加息承诺不再那么确信。

Now, if you look at other assets, that seems to be, that seems to confirm what we're talking about. So the dollar seemed to be slightly stronger earlier in the day and weakened heading towards the end of the session, equities zoomed higher. But note that when we're talking about days like this, there's a lot of options hedgeings activity that seems to create upward movement in equity prices. So as later on in the week, we'll see if this sticks. But across a wide range of assets, it does seem that the market interpreted this meeting to be dovish.

现在，如果你看看其他资产，似乎可以确认我们所讨论的。因此，美元似乎在早些时候略微走强，然后在交易日结束时出现疲软，股票大幅上涨。但请注意，当我们谈论这样的日子时，有很多期权对冲活动似乎会推动股票价格上涨。因此，本周晚些时候我们将看到这是否保持不变。但从广泛的资产来看，市场似乎将此次会议解读为鸽派。

Now, turning to what actually happened at the meeting, for me, I thought was noteworthy, is that your power actually gave a very clear framework as to how he's thinking about the rise in longer dated treasury yields. Let's hear it from him. As long as two conditions are satisfied. The first is that the tighter conditions would need to be persistent. And that is something that remains to be seen. But that's critical. Things are fluctuating back and forth. That's not what we're looking for. With financial conditions, we're looking for persistent changes that are material. The second thing is that the longer term rates that have moved up, they can't simply be a reflection of expected policy moves from us. That we would then, if we didn't follow through on them, then the rates would come back down.

现在，转向实际会议发生了什么，我认为值得关注的是，你的权力实际上提供了一个非常清晰的框架，说明他对长期国债收益率上升的思考方式。让我们听听他的看法。只要满足两个条件。第一个条件是紧缩的条件需要持久存在。这是什么还有待观察。但这很关键。事物一直在反复波动。这不是我们寻求的。在金融条件方面，我们寻求的是持久的、有实质性变化。第二个条件是长期利率的上升不能仅仅是我们预期政策调整的反映。如果我们没有跟进这些调整，利率将会回落。

So basically, what he's saying is that if longer dated yields stay high, he's probably not thinking that he needs the hike rates anymore. Now, that's totally fair. As we know, the tenure yield has been moving around a lot. It moved up above 5%, but now it's markedly below it. My sense is that even where it is today, let's say 4.7%, that's a lot higher than it was in September. And that's still, I think, meaningfully tightening financial conditions.

基本上，他的意思是，如果较长期的收益率保持较高水平，他可能不再认为需要加息了。这是完全合理的。正如我们所知，十年期收益率一直在不断变动。它曾上升到5%以上，但现在明显低于这个水平。我觉得即使是现在的收益率，比如4.7%，也比9月份时高得多。而且我认为这仍然意味着金融条件的收紧。

And as I've talked about over the past few weeks, I don't think the Fed is going to hike anymore. And I continue to believe that cutting is more likely than expected. But the big man himself, of course, is not talking about cutting at all. He reiterated throughout the press conference that he's still trying to figure out whether they need to hike again. He is noting that policy is restrictive, but he's not sure if it's sufficiently restrictive. So he's definitely keeping open the prospect of further rate hikes.

正如我在过去几周谈到的，我认为美联储不会再加息了。我继续相信降息的可能性比预期更大。但是当然，主要负责人根本没有谈论降息。他在新闻发布会上多次重申，他仍在努力弄清楚是否需要再次加息。他指出政策有一定限制，但他不确定它是否足够具有限制性。因此，他绝对保持了进一步加息的可能性。

Now, the second thing that I found interesting today was that Chair Powell doesn't seem to be as certain that he needs a softening in the labor market to get inflation back towards target. Now, over the past two years, Chair Powell has been basically looking for weakness in the labor market. In his mental model, he seemed to suggest that we need to have the unemployment rate go higher, which, of course, will make wages go lower and that will help inflation get back towards 2%.

现在，我今天发现有趣的第二件事是，鲍威尔主席似乎不再如此确定他需要劳动力市场放松才能将通胀恢复至目标水平。在过去的两年里，鲍威尔主席基本上一直在寻找劳动力市场的弱点。在他的心理模型中，他似乎暗示我们需要让失业率上升，而这当然会导致工资下降，从而帮助通胀恢复至2%的水平。

In previous federal conferences, he had cited approvingly former Chair Bernanke's work on the subject that seemed to support this. And it's totally reasonable.

在先前的联邦会议上，他曾赞许地引用了前主席伯南克在这个问题上的工作，似乎支持这一观点。而且这完全合理。

After all, if wages are rising at 5% annual rate, then, you know, it's hard to see how inflation would be back to 2%.

毕竟，如果工资以每年5%的速度上涨，那么很难想象通胀会降至2%。

And in fact, the FOMC, well, important members of the FOMC even created their own super-core measure of inflation, which is basically a service is ex-housing that is highly influenced by wages to point towards the need to have a softer labor market.

实际上，FOMC的重要成员甚至创建了自己的超级核心通胀指标，该指标基本上是除住房之外的服务行业，且受工资的影响很大，旨在强调需要一个较为宽松的劳动市场。

Now, this theory all makes sense, but the fact is over the past year, we have inflation steadily move lower and yet the unemployment rate remains very low. So the facts seem to challenge the narrative that you need a softening of the labor market.

现在，这个理论看起来很有道理，但事实是，过去一年中，通货膨胀持续下降，而失业率却仍然非常低。因此，事实似乎挑战了需要劳动力市场软化的叙述。

And Chair Powell mentioned that while labor participation rate has increased and we've got more immigration, basically, wages can also soften by an increased supply in labor. So maybe we don't need to have a labor market crack. Maybe we could just continue to increase the supply of labor. And so he doesn't seem to be as committed towards that.

并且鲍威尔主席提到，尽管劳动参与率有所增加并且我们有更多的移民，但是基本上，劳动力供应的增加也会导致工资的下降。所以也许我们不需要让劳动力市场出现破裂。也许我们只需要继续增加劳动力的供应。因此，他似乎对此并不特别坚定。

And again, on the margins, this is dovish because we don't need to wait for a crack in the labor market before we start thinking about rate cuts.

再次强调，在这种情况下，这是鸽派的，因为我们不需要等到劳动市场出现问题才开始考虑降息。

Now, the last thing that I thought was interesting, of course, is the question whether or not these rise in long-related yields means that the Fed is going to have to adjust its quantitative tightening program.

现在，我认为有趣的最后一件事，当然，就是这些长期相关收益率的上升是否意味着美联储将不得不调整其量化紧缩计划的问题。

Now, no doubt, QT increases the supply of treasuries that the private sector has to absorb. So that is definitely having an impact on yields. How much hard to say, but Chair Powell was pretty resolute that they're not really thinking about changing the QT program and I don't expect them to.

现在毫无疑问，量化宽松政策增加了私营部门需要吸纳的国债供应。因此，这无疑对收益率产生了影响。具体影响有多大很难说，但鲍威尔主席坚决表示他们并没有考虑改变量化宽松计划，我也不认为他们会这么做。

Not until, of course, we have some serious acts in the market, which, you know, today after today's treasury funding announcement seems less likely in the near term.

当然，在市场上发生一些严重的行为之前，这种情况在近期似乎变得不太可能，尤其是在今天公布国债融资公告之后。

And of course, I'll talk about this at my weekly markets review.

当然，我会在每周的市场回顾中谈论这个话题。

And so that's all I have to say about that. It was, you know, actually it was more interesting than I thought it would be.

这就是我对此事要说的全部了。你知道的，实际上它比我想象的更有趣。

All right, talk to you guys this weekend.

好的，周末再和你们聊。