FED: Bostic Supports No Rate Adjustment Amidst Uncertainty
Atlanta Fed’s Bostic (non-voter) offered post-FOMC thoughts in a post, echoing broader FOMC rhetoric that it’s not prudent to adjust rates with so much uncertainty. The economy should still be resilient but less so than we expected earlier this year. See his full remarks here.
- He supported the decision to leave rates on hold, citing the potential continuation of the current period of uncertainty.
- "Uncertainty is still pervasive in the economy, and business contacts tell my staff and me that they expect uncertainty to persist longer than they had anticipated earlier this year. I don't think it's prudent to adjust monetary policy with so little visibility of the path ahead."
- "My baseline outlook is we're still going to see resilience from the economy, but it'll be less resilient than I expected at the beginning of the year. The confidence interval around this baseline is quite wide. Many outcomes are plausible at this point."
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STIR: More Patient Fedspeak Helps See Fed Rate Path Tilt Higher
- We’ve seen four different Fedspeakers today, three of whom have been unscheduled, all pushing back on expectations of a near-term Fed cut following similar from Powell after payrolls last week.
- Daly (non-voter) wrote in a LinkedIn post that she sees time and space for the Fed to deliberate over its next moves, Kashkari (’26 voter) noted a higher hurdle to adjusting rates in either direction due to tariffs and with a hawkish skew to comments, Musalem (’25 voter) noted higher inflation risks and that a recession isn’t in his baseline in a Reuters interview, and Barkin (non-voter) told Axios that tariff price hikes might take until June to show owing to inventory levels.
- Fed Funds implied rates remain at the hawkish end of today’s range but still show some intermeeting cut odds (2.5bps in the FFJ5 contract) and 14.5bp of cuts for May.
- Cumulative cuts from 4.33% effective: 14.5bp May, 37bp Jun, 60bp Jul, 79bp Sep, 90bp Oct and 104bp Dec.
- Further out the curve, the SOFR implied terminal yield of 3.155% at typing (SFRU6, +5bp on the day) is currently at what would be its highest close since Apr 2 before “Liberation Day” tariffs were announced but are still 24bps below those levels.
- Barkin's appearance at the Economic Club of Washington is to begin shortly (having been delayed from 1100ET) and the FOMC minutes for the Mar 18-19 meeting are still to come at 1400ET.
TARIFFS: Speaker Johnson Uses House Rules Committee To Block Tariff Bills
Laura Weiss at Punchbowl News reporting on X that House Speaker Mike Johnson (R-LA) is using a rule for the budget resolution - on course for a vote today - to turn off the mechanism via which lawmakers can force legislation to the floor, "for any resolution dealing with the April 2 trade emergency." Jake Sherman at Punchbowl notes: "This makes it impossible for anyone to file disapproval resolutions on tariffs through Sept 30."
- The move effectively closes the door for a bipartisan group of lawmakers to take action to targeting the emergency resolution President Trump used to justify his unilateral tariffs. The Grassley-Cantwell bill in the Senate has attracted seven Republican co-signers and a sizeable group of Republicans are reportedly considering signing onto a corresponding House bill introduced by Republican Rep Don Bacon (R-NE).
- Weiss notes that, "a group of House Dems led by Meeks, Neal, Larsen introduced a privileged resolution yesterday to terminate this emergency and block Trump’s big wave of tariffs." That is the third such attempt by lawmakers to rein in Trump tariff authority.
Figure 1: Rules for Budget Reconciliation Regarding Tariffs (Punchbowl News)
US OUTLOOK/OPINION: Gold-Adjusted Atlanta Fed GDPNow Ticks Up, Still Negative
The latest estimate of Q1 GDP growth per the Atlanta Fed's GDPNow was steady at -2.4% Q/Q annualized today following wholesale trade data (though up vs -2.8% on April 3, after ISM Services and trade but before nonfarm payrolls).
- The "gold adjusted" estimate ticked a little higher to -0.3% (from -0.4% prior), the highest estimate since Mar 26 and off the -1.4% low estimate, but still firmly negative.
- Notably the estimates for Q1 real final sales to private domestic purchasers rose to 2.0% from 1.4%. That would be the slowest since 2022 and a pullback from 2.9% in Q4 2024, but still a reasonably solid measure of domestic demand without all of the major external distortions implied by gold imports.
- The next GDPNow update won't be for another week (Apr 16), after retail sales/inventories and industrial production data.
