More Fed talk has market at 5 cuts from 6/Earnings pre-announcments/Other important stuff

With Fed Governor, and thus voting member, Michelle Bowman echoing what Lorie Logan said about the risks to inflation from an easing of financial conditions, they are both basically saying, the more markets rally, the less cuts you see. Yes, Bowman is acknowledging the need to implement some cuts if inflation further moderates, which it will, but here is another Fed member pushing back in her own way on market expectations for 6 cuts. I'll say again, we might get 6 cuts but it will be because the unemployment rate will be 4.5% or higher. By the way, the Fed comments over the past week have taken away one of the markets 6 25 bps rate cut expectations as of year end 2023 and have reduced them now to 5. 

Bowman did not mention the balance sheet and QT but on the heels of Logan's comments over the weekend, Joseph Wang, The Fed Guy on X, made yesterday this great point, "Linking the pace of QT with RRP balances is a bad idea because you essentially outsource your QT timeline to Treasury. The end result would be zero RRP, very high reserve levels and a huge Fed balance sheet."

The NY Fed's Consumer Expectations survey had more interesting info than just the inflation stats. It was good to see the continued drop in expectations for inflation at the one, three and five yr time frames and driven by lower price guesses for rent, college, and food. They were unchanged for gasoline and medical care. On the flip side of the optimism, one year spending expectations fell to the lowest level since September 2021. The percentage of those who don't expect to make a minimum debt payment over the next 3 months saw its 2nd highest print since the Covid shutdowns at 12.42%. Adding to the consumer worries, expected earnings growth decreased by .2 percentage point to 2.5%, the lowest level since April 2021. "The decline was driven by respondents with at most a high school diploma."