We systematically track the evolution of financial conditions and their underlying drivers. We intend to share regular updates of these systematic monitors with our donors on a more exclusive basis (so long as it does not compromise our public mission). This monitor is a reflection of how we think macroeconomic and policy dynamics are affecting financial conditions and, by extension, our assessment of the economic growth outlook.
Takeaways:
- Financial conditions are easing in response to the combination of resilient US growth and possibly a Fed that might be getting closer to the end of its hiking cycle (and the talk of cuts can take on a non-recessionary valence).
- Even assuming some Fed Funds Rate upward drift this month (if bill issuance ramps up), the market is pricing in at least a 25% chance of a hike...
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