The Fed has more to do. At some point, it is going to hurt, Kit Juckes, Chief Global FX Strategist at Société Générale reports.

Fed still closer to the end of its hiking cycle than either the ECB or the BoJ

“The Fed is still closer to the end of its hiking cycle than either the ECB or the BoJ, even if that cycle has further to go. Hence the inversion and the fear that the harder the inflation nut will be to crack, the more damage will be done to the economy its sitting on. That adds up to a slightly stronger Dollar but not dramatically stronger – it’s retraced a third of the fall from its end-September peak. This is set to grind on until the weight of forward-looking recession indicators (the curve, leading indicators, profits, the real estate sector, t name a few) becomes too heavy to ignore.” 

“In the meantime, we watch investors move to the relative safety of credit markets, which appeals to boomers and is fine until it really isn’t. At which point, we’re in a recession.”