Chart courtesy of CME FedwatchFed May 1 Minutes Key Snip

Participants remained highly attentive to inflation risks and noted the uncertainty associated with the economic outlook. Although monetary policy was seen as restrictive, many participants commented on their uncertainty about the degree of restrictiveness. These participants saw this uncertainty as coming from the possibility that high interest rates may be having smaller effects than in the past, that longer-run equilibrium interest rates may be higher than previously thought, or that the level of potential output may be lower than estimated. Participants assessed, however, that monetary policy remained well positioned to respond to evolving economic conditions and risks to the outlook.

Participants discussed maintaining the current restrictive policy stance for longer should inflation not show signs of moving sustainably toward 2 percent or reducing policy restraint in the event of an unexpected weakening in labor market conditions. Various participants mentioned a willingness to tighten policy further should risks to inflation materialize in a way that such an action became appropriate.

Pavlov’s DogsLike Pavlov’s dogs, the stock and commodity markets reacted in the expected way: Stocks are down about 0.6 percent, gold down about 1.7 percent, silver down about 2.8 percent, oil down about 1.5 percent, with copper leading the decline, down 5.7 percent.The percentages are as of 2:30 Eastern.Long-term bond yields barely budged. The 10-year Treasury note yield rose 1 basis point from 4.42 percent to 4.43 percent.July Rate Cut Odds Drop Again

Over the past month, the odds of a rate cut in July fell from 42.4 percent to 18.0 percent.Looking AheadLooking ahead to September, the odds of a cut fell from 66.6 percent a month ago to 60.7 percent today.There is no meeting in August or October. So unless there is a cut in July or an emergency cut in August or October, there will be at most one rate cut before the November election.Are You Worse Off Than a Year Ago?Meanwhile, let’s check out some charts from the latest fed survey on how well people are doing financially. Data from Fed Economic Survey, Chart by MishBetween 2022 and 2023 the numbers improved (lead chart). However, the numbers are a disaster compared to the peak in 2019.

Do You Have 3 Months Emergency Savings?The answer to the Fed’s questionnaire fully explains Biden’s slump in the polls, especially among younger voters and blacks.Rent vs WagesI created a new chart yesterday to see if it could explain why “You Doing OK Financially” peaked at the end of 2021.BLS data, chart by MishFrom 2018 until 2022 the gap between rent and wages tightened. Starting January 2022 rent rose more than wages.Meanwhile, cost of a mortgage rose from about 3 percent to over 7 percent in the same timeframe while the cost of a home increased too.People Who Rent Will Decide the 2024 Presidential ElectionI have been discussing rent and the election since January, and put all the pieces together in my April 20 post: People Who Rent Will Decide the 2024 Presidential Election

Q: What is it that young voters really have on their minds?
A: Rent

Who Are the Renters?

The answer is younger voters and blacks.

For more details and discussion of the Fed survey, please consider my post yesterday Fed Consumer Survey: Are You Worse Off Than a Year Ago?It’s too late for a cut to do much of anything positive for Biden.And if there is an emergency cut by the Fed, it will mean the economy went into a recession. That will not be good for the markets or Biden.More By This Author:Existing-Home Sales Decline 1.9 Percent, Sales Mostly Stagnant for 17 MonthsHoot Of The Day: No One Wants Green Energy If It’s Too Cheap Fed Consumer Survey: Are You Worse Off Than A Year Ago?