"What’s the difference in the macro environment between Walsh’s hawkish stance in mid-June and late August? On June 18, Walsh made his hawkish debut at the FOMC, but the reasoning behind his stance suggested he wouldn’t raise rates because: 1) On June 15, the US-Iran joint memorandum was signed, and oil prices were in a rapid downward trend; at the time, there was confidence that oil prices would continue to drop significantly. 2) US10Y at 4.47%, US30Y at 4.9%. 3) Commodities and agricultural products were still at low levels, without any significant surges. Then came July: Early July saw June’s non-farm payroll data come in significantly below expectations, and mid-July saw June’s CPI data also fall far short of expectations. As a result, Walsh softened his stance at the late July FOMC meeting, suggesting that the market had already done the Fed’s job of raising rates. From this perspective, it seems Walsh is still influenced by data changes. Fast forward to this week, late August, at the central bank’s annual meeting where Walsh spoke, but the overall market environment has shifted: 1) US-Iran tensions reignited in mid-July, pushing oil prices back up to the $85-$90 range, with prices staying above $90 for the previous week. This week, there are signs of easing tensions, but it’s not yet certain. 2) Compared to mid-June, US10Y has risen from 4.47% to 4.71%; US30Y has climbed from 4.9% to 5.2%. 3) Over the past two months: Copper futures have risen 10%, wheat futures have jumped from 580 to 780, and soybean futures have climbed from 1100 to 1300. Heading into September, the market will look to August’s non-farm payroll and CPI data for confidence: 1) Next week’s August non-farm employment data is expected to remain weak, but whether it will be negative like July is still uncertain—this would be a positive signal for the market. 2) Pressure is now on August’s CPI data, which doesn’t look promising, especially the month-on-month figures. Two signals: August U.S. gasoline data is set to be higher than July’s; Truflation’s real-time inflation monitoring is already nearing June’s peak levels again. (While Truflation’s specific figures may not be fully reliable, its real-time trend data is quite insightful.) In short, August’s non-farm payroll data is likely to continue weakening, but August’s CPI might not look so good. This brings us back to Walsh’s original statement: “We must be confident that underlying inflation is moving toward the target, clearly and at sufficient speed. Otherwise, we still have work to do.” Walsh wants to see inflation moving quickly toward the target; if the decline is too slow, he might not be satisfied, and any reversal would be even worse. This is why the market is so tense right now—compared to two months ago, the macro environment has indeed changed significantly. This post is sponsored by @bitget_zh: "Bitget Buy US Stocks: Instant Entry, Smooth Trading" #MacroAnalysis #FOMC #Inflation #NonFarmPayroll #CPI #Bitget #Crypto #Finance #Markets