Fed Funk

The Fed received a double-whammy last week. Not only was 23Q1 GDP upwardly revised from 1.3% to 2%, suggesting the economy was performing meaningfully better than believed, but inflation as measured by core-PCE rose 4.6% in May Y-o-Y, and has been flat for six months. Moreover, the Fed’s favorite measure of inflation, services minus energy and housing, rose 4.5%. The 2% target seems distant. The Fed raises 25bps on 7/26.