by Tom Luongo, Tom Luongo:

It’s been a week since the FOMC gave the market every thing it wanted. After fifteen months it finally got a pause in rate hikes. Pauses in rate hikes are always harbingers of the next rate cut being around the corner.

So, why aren’t markets happy?

Why are Fed Funds Futures heavily signaling a rate hike in July?

Because for the first time since this tightening cycle began, the market now fully believes Jerome Powell when he says he’s not happy about what’s going on.

But Powell was smart this month. Baseline effects in the CPI gave him all the cover he needed to pause raising rates. June and July will be even more dramatic.