After the FOMC meeting this week, it seems that the market expectations are finally aligned with the Fed when it comes to expected rate cuts this year. And they are both indicating no cuts. That leaves the average US consumer with high cost of credit card debt, high cost of living and unaffordable housing, but according to the BLS, fully employed. That also leaves the U.S. economy with a very high cost of debt, with $1Tn in debt interest payments. The response from the Equity market? All time highs. It seems clear the Fed will wait until they have support from data that indicates the economy is slowing; and it can’t be a simple data point, there needs to be confirmation, because the risk they don’t want to assume is deflation. But by doing so, they’re assuming other risks: a banking crisis, a Comercial Real Estate crisis or a debt crisis.
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