MNI: INVITATION:Livestreamed MNI Connect with Fed Bostic On June 30

Q: How do you square the looser financial conditions in the latest monetary policy report with the lower outcome for inflation?

A: I would say that financial conditions didn't loosen, they tightened actually, and that's not because the yield curve shifted down quite a lot. You're right about that. But there was also a shift in FX. We also had a global demand shock as part of our forecast, and energy costs came down quite a lot as well, so that, on balance, reduced the inflation forecast, but not massively, I will say it wasn't hugely different from where we were in February. So it's all those factors together, but part of it is the financial conditions overall didn't loosen as you might expect, if you were just looking at the yield curve."

• In the FI space, a primary bull cycle in Bund futures remains intact and short-term weakness is considered corrective. However, the contract maintains a softer tone and has traded through support at the 50-day EMA, at 130.61. This signals scope for a deeper retracement and today’s extension strengthens the current bearish threat. A continuation lower would open 129.28, 50.0% of the Mar 11 - Apr 7 rally. Initial resistance to watch is 130.96, the 20-day EMA.
• The latest pullback in Gilt futures appears corrective. However, the contract has traded through support at the 50-day EMA, at 92.52. The breach signals scope for a deeper retracement and today’s move down has resulted in a print below 91.73, the Apr 17 low. An extension of the bear leg would expose 91.43, the Apr 15 low. Initial resistance is seen at 92.76, the 20-day EMA. A break of this hurdle would ease bearish pressure.

Greene asked if can describe inflation as transitory:

A: "I'll just highlight that I rolled out our three inflation persistence indicators for a reason, because I think they're generally still looking too high. They're moving in the right direction and focused on kind of concerns around supply constraints in the economy. So I don't think that we can kind of pull out the ticker tape and suggest that it's transitory. I think there are still reasons to to be concerned about inflation persistence, and to consider that, you know, inflation persistence has come down in part because of our monetary policy stance."