LOCKED MI2 Trader: Contagion

On Monday, we said that with inflation reaccelerating and growth prospects surging, Powell “should be preparing the ground to shift to neutral or even hike.”  Clearly, while he didn’t go that far yesterday, we were surprised by how he resisted the tendency to soften any hawkishness during the press conference. Unfortunately, in doing so, he may have set in motion a series of events that could quickly spin out of control.