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Daily update

The Federal Reserve meeting produced a hawkish impression, with a strong focus on fighting inflation. That may put Fed Chair Warsh at odds with US President Trump, as the Fed’s own research suggested US tariffs have added to inflation. Near-term policy changes seem unlikely, given the number of proposed committees Warsh is establishing.
The Fed’s statement was somewhat troubling. Warsh seemingly believes that roughly 130 words can summarize an increasingly complex economic outlook in a global economy experiencing the most dramatic change in 250 years. The statement was 62% the length of these bullet points, which struggle to summarize a single day’s outlook. Warsh thought stable unemployment so remarkable as to give it notable space in the statement. Investors may not consider stable unemployment to be new information.
The Bank of England is expected to leave rates unchanged, with Governor Bailey (and others) offering an intelligent discussion of the economic outlook to help inform investors’ expectations. UK labor market data showed firm employment, with few private sector wage pressures.
The Memorandum of Understanding of Versailles, signed by Trump yesterday, shifts attention to reparation payments to Iran, when the Strait of Hormuz reopens, how much Gulf reconstruction and rearmament might cost, and where those funds will be spent.