"Do you understand the words that are coming out of my mouth?"

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POW-WOW

As market participants and at least one sitting US President wait patiently for Jay Powell’s remarks from Jackson Hole on Friday, the Fed opened the kimono on its July meeting. 

The Fed minutes showed that the 25 basis point rate cut was a “recalibration” or “midcycle adjustment” vs. the start of an aggressive monetary easing policy. You know, the aggressive monetary easing policy the market is expecting.

It’s probably worth noting that this information is nearly a month old at this point … but if the median age of the Federal Reserve Board of Governors is any indication, they likely aren’t too keen on change (... or allowing kids on their lawn).

Anything else?

Also in the minutes was evidence that at least a few members of the Federal Reserve Board of Governors were proponents of a 50 basis point rate cut … and two of Jay’s direct reports entered “no vote” as they were in favor of no rate cut at all.

Still, there was no indication of WTF the Fed plans on doing in September. But if the Board’s concerns (“... economic deceleration, risk management concerns and too low inflation” and “trade uncertainty”) remain there’s a pretty, pretty, pretty good chance that we see a rate cut.

There's your sign

If Jerry Interest Rates was wondering if his policy shift was too little too late, he may have gotten his sign soon after the minutes dropped …

For the second time in a week, the 2-year yield rose above the 10-year yield … a phenomenon more commonly known as a yield curve inversion. But you already knew that.

In case you drowned out the memories of Finance 101 with White Claws and “CBD” oil, a yield curve inversion, especially the “2-10” variety is a strong recession warning.

Fed Officials Viewed July Rate Cut as ‘Recalibration’ of Policy  [WSJ]

IN OTHER NEWS

- Welcome to 2019 ... Germany just sold 30-year bonds with a negative interest rate [Bloomberg]

- Goldman is hiring 100 engineers for trading floor roles. Contractually the new hires will not be permitted to quote 'Caddyshack' [Bloomberg]

- Micromanagement is the name of the game at Deutsche Bank [Bloomberg]

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