Fed Tightrope Keeps Recession Risks Alive
While equities celebrated the Fed's bold 50 basis point rate cut with new record highs, caution flags were also waving beneath the euphoric surface. The surge in Treasury yields suggested some skepticism that policymakers can simply move in a straight line toward easier policy as inflation lingers.
FedEx's dire profit warning two days after Chair Powell's optimistic economic message further stoked fears that aggressive tightening may force a hard landing. Rate futures are already pricing in expectations for more cuts than officials have guided, doubting the soft landing storyline.
These mixed signals suggest the Fed still has work to do to truly calm recession anxieties and keep the risk-on party going. Any policy missteps could quickly pull markets back into tightening-induced turmoil.
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