Much Higher for Much Longer

 Confidence in the economy now seems so strong that stocks can continue to rally even as investors reluctantly conclude that this also means that lower interest rates will be long delayed. 

And Thursday’s data download, which  showed the economy to be startlingly strong, had a perfect 2023 reaction — yields rose sharply, but didn’t stop the stock market from rising. 

All of this comes before Friday’s announcement of PCE inflation, the Fed’s preferred target. 

There are several ways to calculate “real” interest rates, after inflation is taken into account, but all have in common that the Fed still seems somewhat lenient.,

Inflation expectations is more concerning. Joshi experimented with a “Bayesian” approach,  https://www.elmhurst.edu/blog/thomas-bayes/

It certainly looks as though people simply project the past long into the future, even if they don’t realize they’re doing it.

If Joshi is right about this, and behavioral economists have long established that as humans we do indeed tend to project the past into the future, the implication is that monetary policy will need to get much tighter, and the Fed is going to have to force a recession. 

John Authers Bloomberg Friday 30 juni 2023

https://www.bloomberg.com/opinion/articles/2023-06-30/us-recession-economic-fireworks-should-still-dazzle-after-the-fourth

Why the bulls are running and the consumers are buying

Consumes and investors feel rich because they are rich.

https://englundmacro.blogspot.com/2023/06/why-bulls-are-running-and-consumers-are.html