The Daily Update: Fed Speakers / Barnier Listens

Yesterday we had a plethora of Federal Reserve officials all believing that the US economy is headed in the right direction, however it still faces some major potholes as well as continuing to kick talk of tapering into the long grass. So, as they say, in no particular order we had:

Kashkari said the US is a long way away from maximum employment, and the US is poised for a strong recovery if we beat the virus.

Mester said Friday's jobs report does not change her positive outlook on the economy and forecasts inflation at the end of 2021 above 2%.

Brainard stated that while the outlook is bright, risks remain, and we are far from our goals. Additionally, she said that a limited period of pandemic-related price increases is unlikely to durably change inflation dynamics. In Q&A she said she was watching conditions in the housing market closely and asset prices are elevated.

Daly thought the modal outlook is positive, and she is bullish on the economy by year end. She said jobs stability vs. predictability is hurting the return of workers.

Bostic reiterated that policy is in a pretty good place, but has a long way to go. He said any spikes in inflation are likely to be temporary.

Harker believed it makes sense to let inflation run a little bit above 2%, and Fed policy is going to hold steady. He said the April jobs data is a likely outlier.

Also, in the aftermath of the UK’s exit from the EU, where leave campaigners based a lot of their efforts on immigration and ‘taking back control’ of the UK’s borders, it seems that the EU’s chief negotiator for Brexit now gets it. Barnier, now running for president, told French TV he wants to suspend immigration to France for 3-5 years and toughen checks on the EU's external borders. ‘There are links between immigration flows and terrorist networks which try to infiltrate them," he told RTL-LCI-Le Figaro over the weekend, adding that he didn't think all immigrants ‘including those who are trying to cross the Mediterranean to find a better life, are major terrorists or delinquents’.

Barnier went on to say there was ‘social unrest and anger’ over immigration and Europe’s failure to defend its borders and for the ‘red tape and complexity’ of the EU, adding ‘It is our responsibility to understand why the British left, it's important for us to listen to the anger that was expressed in the UK, and to implement the kind of changes that are necessary to better understand and reassure the European citizens that remain’.