Dollar Jumps As Kashkari Comments Trigger Bond, Stock, & Bullion Selling

Minneapolis Fed President Neel Kashkari appears to have triggered some more turmoil this morning with his two-faced non-committal comments:

“While I supported increasing the federal funds rate by 75 basis points at this week’s meeting, and could support another such move in July, this uncertainty about how much tightening will be needed leads me to be cautious about too much more front-loading,”

Kashkari continued to explain, in an essay posted on the bank’s website:

“A prudent strategy might be, after the July meeting, to simply continue with 50-basis-point hikes until inflation is well on its way down to 2%,”

Further out, there seems to be lots of hope-is-a-strategy in his plans…

“If the shocks that are restraining supply begin to subside, then we may not need to raise long real rates as high as we would otherwise. In my most recent SEP submission, I assume that this will take place in 2023, allowing us to then relax policy somewhat in 2024,” Kashkari says, referring to Fed’s Summary of Economic Projections published Wednesday.

“However, if the supply side of the economy does not improve, or if inflation expectations drift higher, then we might need to continue raising rates beyond what I forecast in my SEP submission”

Kashkari’s comments came shortly after Esther George explained her dissent – preferring 50bps to the 75bps hike dcue to fear of creating more uncertainty.

While Kashkari basically said nothing, markets remain hyper-sensitized to headlines (thanks in part to today’s huge OpEx) and stocks tanked…

Bonds also puked…

The dollar spiked…

Which means gold was sold…

Of course, all of this will be ready to flip the other way on the next comments from a Fed speaker.