Sunny Day

Today was a sunny day for stocks and bonds following a few stormy days. That's even though two Federal Reserve district bank presidents (Daly & Mester) said that inflation remains too high and more rate hikes will probably be necessary to bring it down. On the other hand, another one of them (Bostic) said the Fed's "policy right now is clearly in the restrictive territory." He is willing to be patient. We side with Bostic.

The good news today on the economic front was that the FRBNY survey of consumer expectations showed that the one-year-ahead inflationary expectations fell to 3.8%, the lowest since mid-2021 and well below last summer's readings of more than 6.5% (chart). The three-years-ahead expectations edged down to 3.0%.