Just in case RBC's earlier warning that even a trace of hawkishness from the Fed after today's disappointing CPI report was a major risk, moments ago RBC's Charlie McElligott doubled down on his warning, and in a note to client said that the entire investing world now feels completely justified in coming into today with 'dovish hike' expectations.
However, as he adds, "the issue there is that it sets a VERY fine-line on messaging, where you have such consensual expection of 'dovish hike' that the slightest disappointment in this view could rock us."
IF the Fed were to somehow 'screw-up' this very simply 'soft-ball' messaging task and come off as anything resembling 'hawkish'--perhaps by again attempting to use the term 'transitory' to describe what are 'outright collapsing' inflation expectations—the market murmur of 'Fed policy error' grows exponentially. And believe me, I get it that we still have a lot of economic positives going for us. But the market is focused on inflation.