Why Good Economic News Isn't Always Good for Markets
Summary
Colin Martin and Kevin Gordon discuss the paradox of strong economic data potentially triggering Fed rate hikes, analyzing recent FOMC dissents and Chair Powell’s communication style. They examine market reactions to rising bond yields, the impact of a resilient U.S. economy on equities, and the recent coordinated intervention to support the Japanese yen. The episode concludes with key upcoming economic indicators, including July inflation reports and retail sales, that will guide future monetary policy decisions.
Topics discussed
Introduction and guest Kevin Gordon joins Colin Martin
Good news is bad news: Labor market, inflation, and market reactions
Fed policy: Forward guidance vs. reaction function under Chair Warsh
Market reaction to FOMC and long-term bond yield outlook
Impact of potential Fed rate hikes on the stock market
Japanese yen intervention and the carry trade implications
Week ahead: Inflation data, retail sales, and closing remarks
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