Latest / Best of Business / Brendan Larsen: Milford Asset Management expert ahead of the next US Federal Reserve meeting

Transcript

Brendan Larsen: Milford Asset Management expert ahead of the next US Federal Reserve meeting · Best of Business

• 0:09
  Speaker 1: You're listening to a podcast from News Talk sed B.
• 0:12
  Speaker 1: Follow this and our wide range of podcasts now on iHeartRadio.
• 0:17
  Speaker 1: Ryan Bridge, let's.
• 0:18
  Speaker 2: Get to markets and have a look see with Milford
• 0:21
  Speaker 2: and we are joined by Brendan Last and Brendan Good
• 0:24
  Speaker 2: Evening Evening, Ryan, So uish Feed is going to make
• 0:29
  Speaker 2: the decision. We will know tomorrow morning, won't.
• 0:31
  Speaker 3: We We will? We will, Ryan. It's look, there's fair
• 0:35
  Speaker 3: to said there's a lot happening beneath the surface. So
• 0:37
  Speaker 3: I guess it's worth sort of recapping where we've been
• 0:40
  Speaker 3: since the last meeting. Look, if you recall prior to
• 0:43
  Speaker 3: that last one, we did have Givin Walsh Joiner's chair
• 0:46
  Speaker 3: for the first time, and there's no doubt he came
• 0:48
  Speaker 3: out swinging in a more hawkish way. So since this meeting,
• 0:51
  Speaker 3: data has actually come in a little bit weaker than
• 0:53
  Speaker 3: the market had expected, and that's really undermined the case
• 0:57
  Speaker 3: to be hawkish at this meeting if you took that
• 0:59
  Speaker 3: data purely at face value. So we had CPI print
• 1:03
  Speaker 3: below expectations. PPI also printed printing below expectations, and important
• 1:08
  Speaker 3: there was some softer job data as well over that
• 1:10
  Speaker 3: time period. In saying that we've gone from an MoU
• 1:13
  Speaker 3: in Iran to renewed conflict and with that, well clearly
• 1:17
  Speaker 3: back towards the hires and so there's still certainly inflation risk,
• 1:21
  Speaker 3: and one or two good readings doesn't avoid the fact
• 1:24
  Speaker 3: that the policy's probably been loose for it for too long.
• 1:26
  Speaker 3: So really interesting setup.
• 1:27
  Speaker 2: Yeah, and yet the market is still pricing reasonable chance
• 1:30
  Speaker 2: of a hike here, right they are.
• 1:33
  Speaker 3: Look, you know, after the sort of softer inflation numbers,
• 1:35
  Speaker 3: we did see that pricing come off a little bit,
• 1:38
  Speaker 3: but in recent days we've seen this go back towards
• 1:40
  Speaker 3: around a thirty percent probability of a rate hike. So
• 1:43
  Speaker 3: the general consensus in the market is if we don't
• 1:46
  Speaker 3: see a rate hike, there'll be sort of hawkish descenters
• 1:48
  Speaker 3: to holding rates steady. And really that centers around the
• 1:52
  Speaker 3: fact that inflation remains meaningfully above target and growth remains
• 1:56
  Speaker 3: really quite strong, and so Kevin Walsh has tried to
• 1:59
  Speaker 3: talk tough on his inflating inflation fighting credibility, and so
• 2:03
  Speaker 3: the market is really trying to test this now and
• 2:04
  Speaker 3: I think that's why this pricing has increased again into
• 2:07
  Speaker 3: the meeting.
• 2:08
  Speaker 2: It's testing whether his bite is going to be as
• 2:11
  Speaker 2: loud as his bark, isn't that.
• 2:13
  Speaker 3: Yeah, that's right, and I think that's why we're sort
• 2:16
  Speaker 3: of setting up to, you know, really quite interesting meeting.
• 2:20
  Speaker 3: And so you know, I think the implications of this
• 2:22
  Speaker 3: are really quite interesting as well. So the market, as
• 2:24
  Speaker 3: I alluded to, has come around to expecting this more
• 2:27
  Speaker 3: hawkish outcome, and as I said, not necessarily a hike,
• 2:31
  Speaker 3: but at least several dissenters and some suggestion of appending
• 2:34
  Speaker 3: hike in September. The issue, as I sort of alluded to, is,
• 2:38
  Speaker 3: you know, the data really hasn't been there, and so
• 2:40
  Speaker 3: it is a relatively risky move for him to sort
• 2:42
  Speaker 3: of stick his neck out. Core inflation has actually been
• 2:46
  Speaker 3: relatively subdued in spite of that stronger growth, and that's
• 2:49
  Speaker 3: what's making it quite interesting. And so yeah, Chirwash has
• 2:52
  Speaker 3: told us he'll set policy according to data, and that
• 2:55
  Speaker 3: data has been relatively benign.
• 2:57
  Speaker 2: Brendan Last and Melfol good to have you on the show.
• 2:59
  Speaker 1: For more from News Talks at b listen live on
• 3:02
  Speaker 1: air or online, and keep our shows with you wherever
• 3:05
  Speaker 1: you go with our podcast on iHeartRadio.