US Treasury secretary, Steven Mnuchin, says to focus on dovish Fed and not on more rate hikes to come
- The market reaction is completely overblown
- Thinks that the market was disappointed by Powell's comments
- Says if inflation remains low, rate path for next year might change
- "You can't just look at the headline which was two more rate hikes"
- "You have to look at the 17 dots on the dot plot"
- Says that the Fed is "close to done" and will be data dependent
- US equities remain a tremendous value
Bloomberg has more of his comments in an interview with Fox News yesterday here but the above are the notable ones. I think Mnuchin is forgetting that one does not simply tell the market how to behave/react.
In case you're wondering what he means on the dot plots, here's a comparison:
December meeting
September meeting
The median for the future path of rates are lower in the December projections as well as the long-term rate. And that is what Mnuchin is arguing, stating that markets should be focused on the more dovish outlook by the Fed here.
Nonetheless, Mnuchin's comments appear to have fallen on deaf ears as US stocks still took yet another beating yesterday. The S&P 500 index is set for its worst year since the global financial crisis and it looks set for its worst December month since the Great Depression.
As of yesterday, the index is down by 10.6% this month and is 7.7% lower on the year.
