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Analysts at Rabobank note that the Fed speakers yesterday gave little indication the FOMC is any closer to stepping back from its hawkishness.

Key Quotes

“Vice-Chair Clarida restated support for gradual rate hikes ahead, Bostic noted there are “pockets of distress“ but many cities are booming; and Evans talked about growing skilled-labour shortages.”

“Only Bullard mentioned possible “cracks“ in the economy as the “main challenge for the Fed going forward,“ and that he expects the economy to slow in 2019 and 2020. However, President Trump has his own view:  “I’m doing deals and I’m not being accommodated by the Fed,“ he says in an interview with the Washington Post. “They’re making a mistake because I have a gut and my gut tells me more sometimes than anybody else’s brain can ever tell me.“ Trump also weighed in on Fed Chair Jerome Powell: “So far, I’m not even a little bit happy with my selection of Jay. Not even a little bit. And I’m not blaming anybody, but I’m just telling you I think that the Fed is way off-base with what they’re doing.”  In that case the president’s gut is the same as the US yield curve and the Fed Funds futures strip, both of which agree the Fed is close to making a mistake. Might that take some of the wind out of the USD sails, even as the trade front argues for it to soar?”