The Barclays Research Team published a note overnight, with its take on the Fed’s policy tightening and on the outlook for the US dollar.
Key Quotes:
“There appears to be little reason for the Fed to pull back from its tightening path, growth is still strong, citing influences:
- Fiscal stimulus will boost growth through until mid-2019, perhaps further.
- Tax cuts have given a boost to incomes that continue.
- Financial conditions are still accommodating.
- Markets may be over-interpreting the degree of caution intended by the Fed
- Failing to think fully through the consequences for the USD if foreign growth disappointments dampen the Fed’s path (even if growth ex-US is weaker its unlikely that will cause a USD sell-off.”
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