Danielle DiMartino Booth, founder and CEO of Quill Intelligence, joins Jack Farley and former senior Fed trader Joseph Wang to share her outlook on this week’s FOMC meeting. Booth argues that the Federal Reserve’s lateness to fight inflation has caused it to lose a lot more credibility, and makes the case that it risks to lose even more credibility if it fails to recognize that the economy is slowing rapidly. Booth notes that credit spreads are widening rapidly and argues that it will be a credit market blow-up, not an equity market drawdown, that forces the Federal Reserve to change course.
Wang and Booth discuss how rising mortgage rates will deter the Fed from shrinking its holdings of mortgage-backed securities (MBS), and they each give their take on the continued sell-off in Treasury bonds. Here is a direct video link.
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