Key takeaways
- The Fed remains outcome-based (or, to be more precise, employment-based near-term) and with the weak jobs report on Friday, we do not expect the Fed to change policy signals near-term. The likelihood of a hawkish shift already in June has declined.
- The Fed still thinks the labour market recovery has “a long way to go”, which seems to have become the new mantra. The Fed does not expect the high inflation prints to continue, when base effects start to drop out.
- We are still more upbeat on the labour market recovery than the Fed and still expect the Fed to move in a more hawkish direction in September Actual tapering is likely to begin in January 2022.