Does This Look Like A Good Time To Hike Rates?

Janet, you have a problem…

A disastrous morning for US macro data has sent Citi’s Macro Surprise Index to its lowest since May 2015 with The Fed’s March rate hike perfectly top-ticking the economic data that it is so “dependent” upon…

This morning’s ‘hard’ data tumble pushed it to its weakest since April 2016 and ‘soft’ data tumbling back to reality…

As Citi notes, breaking down this move, we can see that the recent data disappointments have been driven by a steady fall in the underlying data, rather than overly exuberant expectations. In other words, economists have been adjusting expectations downwards, but the data has been falling at a faster rate. This chart shows this relationship, as the Data Change Index (shown by the red line) has been declining more quickly than the Consensus Change Index, which measures the change in expectations (shown by the light blue area):

And yet we are assured by The Fed that a hike is overdue and everything is awesome… (though notably the market dropped from pricing in 1.48 rate hikes in 2017 (including today’s) to just 1.32 rate hikes…

Is what little that is left of The Fed’s credibility about to be crushed?

Finally, can you spot the country that is tightening its monetary policy?