🧰The Fed sees more rate hikes ahead🗽

The release of the FOMC minutes shows the Fed continuing to raise the interest rate to restrict economic activity, tame inflation and stabilize consumers’ inflation expectations. After which, it intends to slow the pace. 

Indeed, central bankers were persistently worried about the sticky inflation and a tight labour market. This warrants the need to move the rate beyond the neutral rate towards a more restrictive regime. 

🧸Balance Sheet Adjustment✂️

The FOMC members also plan to potentially double the balance sheet reduction in September that was laid out in May based on a decrease of $60 billion in Treasurys and $25 billion in mortgage-backed securities. 

The pace of the rate hikes coupled with the balance sheet shrinkage will still be data-dependent. Once a certain level of restrictive nature is achieved, it is likely appropriate for policy to maintain at a certain level better to assess the impact of policy changes on inflation. 

🛎Equity market responded🌴

The stock market initially pared some losses but returned the part of the recovery as the FOMC minutes were seen not too dovish. Uncertainty remains moving into the 20-21 Sept FOMC meeting as there is uncertainty on whether a third consecutive 0.75% is warranted. 

There is also a concern that the tightening policy may have gone too much that necessary to help restore price stability. After all, policy impact has a lag time to take effect. Baring any uncertainty, market participants are still pricing a chance of a 0.50% rate hike in the coming meeting, and this is set to change as more economic data is revealed in the coming weeks. 

📉Bed Bath & Beyond: Pain for Pika World🔫

We continued to bleed badly on our positions as shares tumbled in after-hours, given the news that Ryan Cohen has signalled in a regulatory filing of his intent to sell all the stakes in BBBY. 

If we recall, Cohen had bought the shares between Jan 13 and March 3. The company is also updating its progress to bolster its balance sheet to cope with liquidity concerns. 

Pika World will explore ways to exit our positions since it hurts our capital base. 

🎙What’s on the menu today?🔦

At 10 am, we will receive the existing home sales figure for July. We expect it to decline from 5.12M to 4.89M. 

After midnight, we will hear multiple FOMC members speaking, such as George and Kashkari.