From Marc to Market:
There are two dominant issues today. First, the ceasefire in the Middle East continues, but the blockade of Iran is an act of war, and the Strait of Hormuz remains blocked even if there are some reports that a few ships have managed to transit it. July Brent is at new contract highs and June WTI has approached last month’s record high. The higher energy prices and the broader disruption continue to underpin bond yields and have stalled the equity rally. Second, what looks like Powell’s last FOMC meeting (as chair) concludes later today. A hawkish hold is the most likely outcome, but as a consummate professional, Powell is unlikely to emphasize the forward guidance except to note its uncertainty due to the war. There is much interest whether he remains as governor. We would not be surprised if it remains unresolved at the end of the day. The Bank of Canada meets too, but with more economic slack, its hold may be less convincingly hawkish.
In a speech to Congress yesterday, King Charles III urged the US to reject isolationism. This is a common meme, but it rings hollow. After bombing seven countries since the start of the last year, threatening to attack two NATO member, kidnapping the head of Venezuela and the war on Iran, there is nothing about US foreign policy that is “isolationist”. “Unilateralism” is a better description, and it is what has spurred talk that “trust” that underpinned the dollar’s role in the world economy has deteriorated....
....MUCH MORE
Mr. Powell should probably leave the Federal Reserve Board when his time as Chair is up. Remaining doesn't seem to add anything and would probably detract from the foci the board might otherwise exhibit.
But maybe that's just me.
On the other hand, if he doesn't leave and should the bond market face collapse in the next six months, with dissension as to what actions the Fed should take, I'll probably be back with a "neener-neener."
