00:00We wrap up a quarter and really a first half to the year that I think defied a lot of expectations and now we're heading into a second half where there are big expectations when it comes to the budget bill in Congress when it comes to the Fed potentially cutting rates and just overall some semblance of economic stability if not necessarily resilience. You buy into that narrative. That's the hope. I mean I think we can sit here at quarter end and through the first half of the year recognizing that we've had a volatile first year and first part of the year. And I think one of the things you have to reflect on
00:29is that that volatility will persist for some time. So just because we're have a calendar break so to speak doesn't mean that we go and continue to accentuate that lack of volatility for the remainder of the year. In fact there's plenty of political discussions going on. Clearly the debt outlook is not something that is going to be satisfied or remedied at any time in the near future. And from our perspective at PIMCO one of the main concerns which prevailed at the beginning of this tariff discussion still exists which is inflationary outlooks.
00:59And that inflationary outlook is the key tenant for why the Fed may or may not cut. It's a key tenant why stocks might persist on an evaluation basis. It's also the key tenant why we see a steepening yield curve which is steepened by 30 basis points over the past quarter alone.
01:14There's factors in here where inflation will continue to dominate the topic for the time being. So yes we can take a sigh of relief at the moment but there's a lot coming in the coming quarters.
01:24But when you talk about inflation what are we talking about a reacceleration in the inflation and the inflation rates where we're at right now. There's some there's some expectations that inflation will continue to move higher.
01:34We expect that core core PCE will go move higher to about 3.1 percent by the end of this year. PCE or CPR on the other hand will go to 3.5 percent.
01:43That natural wedge that's in there. For that perspective we're not anywhere close near that Fed target. And so while there's discussions romantic ideas that the Fed's going to get cut by five six times over the course of the next calendar year.
01:55The reality is in the immediate future is probably off the table at least in July. Maybe not until later this year where we see an inclination where that slower growth mechanic translates into an actual rate cut at that point in time.
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