• Federal Reserve officials offered uncharacteristically blunt words of warning to investors that cautioned against underestimating the central bank’s determination to hold interest rates at higher levels to bring down inflation.
• many Fed officials are anxious they won’t be able to defeat inflation unless they can slow the economy by tightening financial conditions, such as by raising borrowing costs or lowering stock prices

Why the attention on this guy? As I posted last year:

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Back in June Timiraos dropped the bombshell during the Federal Reserve blackout period:

WSJ Fedwatcher Nick Timiraos is just out with a new report previewing the FOMC.

“A string of troubling inflation reports in recent days is likely to lead Federal Reserve officials to consider surprising markets with a larger-than-expected 0.75-percentage-point interest rate increase at their meeting this week,” he writes.

The report is speculation but it taps into the old-style Fed leaks.
That post, as was Timiraos, was spot-on.

Timiraos has thus been crowned the new Hilsenrath (you may remember his role during the Bernanke Fed as a provider of Fed-insider info).

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The article in the Wall Street Journal (linked above, gated) is not a bombshell like the leak in June was, but it is instructive. The rate hike cycle is not over and looks to me that it’ll go beyond what many are expecting. I’d love to be wrong on this.

Coming up later today from the US is a barrage of data and also, and of much focus, the minutes of the Federal Open Market Committee (FOMC) December 13th – 14th meeting.

Due at 1900 GMT on Wednesday 04 January 2023.

• Inflation developments, Fed officials have been keen to point out further upside risk for CPI
• softening financial conditions prior to the meeting, does the FOMC need to push harder against these?
• terminal rate predictions in the future; Chair Powell said at his news confernce on the 14th that Powell had said in his press conference that he “can’t tell you confidently that we won’t raise our terminal rate estimate again in March”

An interesting item from Reuters on Saudi Arabia’s state oil giant Saudi Aramco maybe cutting the official selling price (OSP) for its flagship Arab Light crude grade to Asia in February.

“The near-term market outlook is dim. More Russian barrels are expected to flow to Asia, but demand is not picking up,” said one respondent to the Reuters poll of analysts.

Reuters adds:

• The price cut comes as Russia diverts its oil from Europe to Asia, after the European Union banned seaborne crude oil imports from Dec. 5, alongside a price cap introduced by the Group of Seven (G7) nations that restricts Russian oil trade using Western financial, shipping and insurance services.

Here is the link to the piece for more.

The Financial Times is gated, reporting moments ago that the “EU offers free Covid-19 vaccines to China to help curb outbreak”.

FT citing EU commission officials, speaking under the condition of anonymity

Snippet via analysts at Natwest, thier overarching view is for major DM economies to enter into recession this year.

US CPI forecast down to 3.2% in 2023

• Eurozone inflation at 2.6% this year
• UK inflation at 4.3%

Fed Funds rate terminal at 5% by the middle of this year

• European Central Bank rates to 2.25% this quarter and then to persist there