FED will be getting increasingly hawkish as they try to tamp down the insatiable appetite for rate cuts from a market behaving like a spoiled brat that is ready to throw tantrums if it does not get its rate cuts from the beleaguered FED that is taking heavy incoming from all directions, it seems.
So, expect a 25bps rate cut and hawkish comments/commentary/press conference on the same day. Markets will then tank all the way below SPX 2800.
But for July, market marking time, up & down, mainly up, until the FED meeting.
At time, the FED will tell the market: "Here, market, take a bone, and now go out and play in the yard, we got no more for you until way down the line, if there is any at all." Market does down even more....
So how does the market force the FED's hand for more rate cuts?
Simple, easy: crash the market to SPX 2700 or lower and you will get a slew of rate cuts! But, says the market, we do not want the markets down while we want rate cuts to take it higher!
No, you can't have BOTH.
"it becomes much harder for the Fed to justify cutting rates. It seems the market has to be prepared for a Fed meaningfully more hawkish at its July 31st meeting than currently priced in." - BofA
