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:
- Growth driving financial conditions: Better-than-expected growth outcomes continue to support higher Treasury yields (fewer implied rate cuts), credit spread tightening, higher bond yields, and higher equity prices. Aside from generally supportive economic data from the past month, regional banks' share prices are also beginning to recover and suggest marginally lower tail risks of late.
- Fed Pricing Suggests June "Skip" But A More Hawkish Policy Path: Despite increased odds of a "Skip" at the June FOMC meeting, the front-end has stealthily priced in a more hawkish path for policy. The expected Fed Funds Rate...
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