Bank of America / Merrill Lynch warn there is a risk of both Fed and ECB policy mistakes
We believe that the Fed's dovish tone is not sustainable
- getting concerned that a sudden shift could shock markets
BoA couch their concerns in Fed assurances they will not be proactive and will wait for improving data to show, but says BoA:
- the US economy is already booming, with data (NFP and ISM last week) well above expectations
- Vaccination is also accelerating even faster than expected
BoA do note though:
- To be fair, the market is already pricing Fed policy normalization, but our rates strategists believe that the Fed could start later and move faster than markets expect
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I'll post on BoA ECB thoughts separately
ps. Powell's weekend comments were quite sanguine: