Market Wrap – More Fed member talk

The stock market started to turn lower in the US session as another Federal Reserve member addressed the mammoth task in taming inflation and noted  We still have some work to do to get inflation under control.

Fed member Williams was interviewed by the so-called Fed whisperer Timiraos, who did a good job of probing on rates but he didn’t tip his hand on hikes.

John C. Williams is the president of Federal Reserve Bank of New York was asked today about whether jobs data would change his view on terminal rates, and he said that “the December dot plot views are still ‘very reasonable’ due to totality of all data.”

Fed member Williams kept the 5-5.5% range on the table during the interview, but repeatedly highlighted data dependence. He also offered an encouraging take on the economy, and I think that’s ultimately what filters back into the rate outlook.

Williams also said that the “Fed will watch the data to determine path of rate rises” and “There is a lot of uncertainty around the outlook”. These comments naturally pressured risk-on asset classes.

Voting member Williams also added that “Maybe services prices stay elevated, and if that happens we’ll need higher rates” and “I broadly see financial conditions as having moved tighter.”

Furthermore, he added that “Some underlying inflation numbers like Dallas Fed trimmed mean is around 3.75% and Fed funds is about 1 percentage point above that. To get sufficiently restrictive, you need to get higher than that.”

John C. Williams is an important member of the Fed, and the president of Federal Reserve Bank of New York. In his role, he serves on the Federal Open Market Committee, bringing the Fed’s Twelfth District’s perspective to monetary policy discussions in Washington.

It also noteworthy that the Fed Funds Rate crept up by around 0.23+ percent today. This indicates that rate hike expectations are rising.