Summary
We discuss Friday’s Payrolls print, last week’s ISM services data, and Powell’s Economics Club Q&A. Both Payrolls and the ISM were strong, but several factors likely flattered both data points. Powell’s Q&A contained little game-changing information for rates, but his comments on the balance sheet were more interesting. We adjust our Fed subjective probabilities to give greater weight to hawkish tail scenarios that may materialize should the data continue to surprise, but do not adjust our modal Fed Funds path overall.
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