Market news nowadays are saying that Fed is bullied by the market.
e.g. FT article: The Fed should resist market bullying
What’s “bullying”? Seems to me that market is leading and Fed is just following the market.
Why is this the case? I got three reasons:
1/ 2024 is election year. Market knows Fed needs to help the economy.
2/ Market understands data better, and Fed has been saying it’s “data-dependent”; no wonder why market (e.g. hedge funds) is leading with all those high-frequency data. Hedge funds can simply simulate what data Fed is receiving and even have better real-time data than the Fed.
3/ Some market players can “influence” or “control” the data. Sounds absurd. Just an example – what if hedge funds can buy up goods which would cause inflation when needed, or sell them at low prices to cause deflation when needed. As long as they can make huge profits in the market, it can be worth the cost.