Eurodollar University Jeff Snider

A consensus is being reached even among the official classes: "inflation" has peaked and with that consumer price pressures are going to reverse. That means decelerating price changes and eventually, in some places, falling prices. While this seems like it would be a very positive development, only in a world where all else remains equal. We don't live in that world.

It has taken decades for officials mainly *outside* the US to catch on about massive monetary innovation. Currency and forex swaps aren't weird derivative contracts certain banks use, they are money and money creation. The BIS belatedly tells us (what we already knew) there's $80 TRILLION in such "hidden" money - denominated in dollars - around the world that some of them only now realize had been a huge part of both 2008 and 2020, and could be for the next one, too.

There's a battle going on with the labor market data, an unprecedented divergence in statistics. CES or the Establishment Survey suggests one thing about the economy while more and more evidence across the CPS aligns directly against it. The timing couldn't be more inconvenient, implications just massive given where we are. Will policymakers allow themselves to be imprisoned with the one, or have they given more consideration to the other already?

The public has been misled about interest rates. We associate low interest with easy and cheap money. And it is, if only for a select few. The rest of us have to suffer - in silence - while these misconceptions only make things so much worse. Understanding rates isn't an academic exercise about the past, it is absolutely critical for analysis and forecasting upcoming future risks.

Even before Jay Powell's remarks today, the economic situation was shown to have deteriorated here and abroad. A couple of American jobs reports indicate layoffs and further looming setbacks. Meanwhile, China's economy is suffering a lot more than lockdowns and protests. No wonder Powell turned "dovish."

Another dependable financial signal and inversion. The forward Treasury rate (2-year) has repeatedly inverted with respect to its nominal counterpart each time the Fed's rate hikes come to an end. I'll explain what the forward rate is and why it matters.