Wow, stunning that financial conditions, as measured by the Chicago Fed’s National Financial Conditions Index, (see last table), are as loose as they were back in April 2022, when the Fed Funds upper limit was at 50 bps versus 5.25 percent today.  Markets love it, but the Fed must be shitting razor blades.  They’ve got a tiger by the tail as they wait (and fret) for quantitative tightening to bite. 

The U.S. central bank has only taken back about 14 percent, around $670 billion, of the almost $5 trillion they injected into the financial system during the pandemic.  We maintain there should be more of a focus on the quantity of money, which we define very loosely under the umbrella of household wealth, rather than obsessing over the price of money or interest rates.   Stay tuned.