Minutes of the Federal Open Market Committee (FOMC) meeting held on March 16-17 were published. Minutes of the Federal Reserve's (Fed) last meeting revealed that it will take some time for significant progress towards maximum employment and price stability targets, and asset purchases will continue at least at the current pace. While the minutes do not reveal much new information, the emphasis on the need for time to reduce QE seems to have relieved the markets. The Fed will probably start communicating this very soon when it reaches this stage. The important thing is to sustain the improvement and find stability in the target within the natural cycle of inflation.
The issue of how to evaluate the future money for the actors of the economy within the framework of the Biden aid and infrastructure packages, which are expected to contribute positively to recovery and inflation, is important for the markets. Global liquidity is abundant, and abundant money has led to a bull market in almost all asset classes. Stock, crypto money and the bond market for a certain period… Now, in an environment where the bond market forces the financing conditions to tighten with the sales, we see that the majority of the money that is supposed to be reflected as spending on the real economy is directed to replace the previously consumed savings and earn money from the markets.
Inflation indicators such as PCE, CPI, PPI and activity indicators such as retail sales will be important in terms of revealing expenditure trends. An important part of the assumptions about warming in inflation came from the commodity price and the remaining part from the demand-increasing expectation of expenditures. If the money injected into the economy with financial packages will not enter the real economy as much as it is thought, that is, it will not turn into spending much, it is understood from here that either the old savings are replaced or the money is going to invest. This trend; The stock market is positive, but the corporate tax, which will increase to 28%, will not particularly please the technology giants. Growing competition with China can also increase the costs of firms.
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