What To Expect From FOMC Minutes? Market predictions and reactions - page 6
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Fischer Praises Economy, Straddles FOMC Liftoff Date Camps
Federal Reserve Vice Chairman Stanley Fischer left open the option of an interest-rate increase next month, walking a line between officials who want to delay due to market turmoil and those who say the economy is strong enough to handle a move.
Fischer said reports on the U.S. economy’s tempo have “been impressive, and the economy is returning to normal,” in an interview with CNBC from the Kansas City Fed’s annual retreat in Jackson Hole, Wyoming.
“I think it’s early to tell, the change in the circumstances which began with the Chinese devaluation is relatively new and we’re still watching how it unfolds,” he said. “I wouldn’t want to go ahead and decide right now what the case is, more compelling, less compelling,” for a September liftoff.
On Wednesday, New York Fed President William C. Dudley said market turbulence made the case for a September move “less compelling to me than it was a few weeks ago.”
Fischer’s remarks place himself between two camps on the Federal Open Market Committee. Officials such as Fed presidents James Bullard of St. Louis and Loretta Mester of Cleveland say the economy’s cumulative gains have been strong and they expect them to continue, and put varying weight on recent market movements.
“My view so far in looking at all of the factors is that the economy can sustain an increase in interest rates,” Mester said in an interview Friday with Bloomberg Television at Jackson Hole.
Less Compelling
Another camp is signaling there is little reason to rush and appears to prefer to hold off and determine if there is fallout from market volatility, a slowing Chinese economy and the devaluation of the yuan on Aug. 11.
Fed officials next meet Sept. 16-17. “We’ve got a little over two weeks before we have to make a decision, and we’ve got time to wait and see the incoming data,” Fischer said.
“We haven’t made a decision yet and I don’t think that we should make a decision,” he said. “We’re dealing with something which happened about 10 days ago, particularly the change in the circumstances.”
Officials had been “anxious to get going” with getting rates off zero but now need to figure out if market events have blown them off course, said Atlanta Fed President Dennis Lockhart, who is a voting FOMC member this year. The Fed has held rates near zero since 2008.
“The fundamentals of the economy are really solid,” he told Bloomberg Television Friday at Jackson Hole. “I weigh both the distance that we have traveled as well as the current outlook for the economy. Both of those to me I think would suggest that we’re close. The timing is close.”
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Being payed to tell nonsense is the vest job there is : “The fundamentals of the economy are really solid,” he told Bloomberg Television Friday at Jackson Hole. “I weigh both the distance that we have traveled as well as the current outlook for the economy. Both of those to me I think would suggest that we’re close. The timing is close.”
He did not tell anything at all - politics 101 instead of economy
Being payed to tell nonsense is the vest job there is : “The fundamentals of the economy are really solid,” he told Bloomberg Television Friday at Jackson Hole. “I weigh both the distance that we have traveled as well as the current outlook for the economy. Both of those to me I think would suggest that we’re close. The timing is close.” He did not tell anything at all - politics 101 instead of economy
That is called : "Being a bankster" - they are payed to pretend that they know what are they doing
Was that report enough for Yellen to hike rates at the Sep FOMC?
The market isn't sure
A mixed bag as Adam expertly notes. Down on the headline, up on the revision. Wages moving in the right direction, still creeping though.
Is there enough "improvement" here for the Fed to raise on? There's nothing really wrong with the report bar a poor performance in manufacturing. That's been on the cards for a while though given the recent performance in the sector
In my opinion there's nothing wrong with the jobs market and why the Fed shouldn't hike. I'm not the market though and economists are now off making that decision. If they wanted a big flashing sign that said "This is the one - Fed's a go" this wasn't it
But then, when will it be?
Fed's Lacker says will go into September policy meeting 'with an open mind'
The head of the Richmond Federal Reserve said on Friday he would go into the Sept. 16-17 Fed policy meeting with an open mind over whether to raise interest rates this month.
"I'm always open to listening to my colleagues in the meeting," Richmond Fed President Jeffrey Lacker, who had earlier in the day advocated for hiking interest rates soon, told reporters. "Otherwise we can just do these things by notation vote. And so I'm going in with an open mind."
USD Into Next Week's FOMC - Goldman Sachs
"With an all-important FOMC meeting coming up next week, focus on the USD factor may increase once again. That has not typically been helpful for EM FX in recent years.
But given our US Economics team’s view that the first hike is not likely to come until December and given the very sharp sell-off in EM FX in recent days, some stabilisation is certainly possible in the event of a dovish outcome.
This would argue for some near-term caution in chasing the rapid moves of recent days. However, such a reprieve is likely to prove temporary, in our view, because the underlying external and internal adjustments are not complete, and we continue to see room for EM FX weakness versus the USD to extend in the medium term,"
Goldman Sachs sees no rate hike in September
The big event of the month is already looming above our heads: the Fed decision of September 17th. To raise or not to raise the rates?
The team at Goldman Sachs doesn’t see it coming now and explains what it means for the US dollar.
Here is their view, courtesy of eFXnews:
“With an all-important FOMC meeting coming up next week, focus on the USD factor may increase once again. That has not typically been helpful for EM FX in recent years.
But given our US Economics team’s view that the first hike is not likely to come until December and given the very sharp sell-off in EM FX in recent days, some stabilisation is certainly possible in the event of a dovish outcome.
This would argue for some near-term caution in chasing the rapid moves of recent days. However, such a reprieve is likely to prove temporary, in our view, because the underlying external and internal adjustments are not complete, and we continue to see room for EM FX weakness versus the USD to extend in the medium term,”
Aleksandar Timcenko, Kamakshya Trivedi – Goldman Sachs
Deutsche Bank's top economist says the Fed won't make a move until markets give the all clear
Deutsche Bank's chief US economist Joe LaVorgna doesn't think the Federal Reserve will raise interest rates until the market says it's okay.
In a note to clients on Thursday, LaVorgna said that basically, the Fed is on hold until markets make clear that they are ready to handle a change in the Fed's posture.
LaVorgna wrote on Thursday (emphasis his):
Most importantly, the financial markets have to be discounting a reasonably high probability of an interest rate hike. In other words, the Fed will not surprise the financial markets with a tightening in policy. (Unfortunately, this is how monetary policymakers have conditioned the financial markets over the years.) The difficult part for the Fed will be convincing the markets that the funds rate can go up next month.
LaVorgna's note outlined seven things he'll need to see from the Fed for an October rate hike, a call that comes just one day after LaVorgna gave up his call that the Fed will raise rates next week. The Fed hasn't raised rates since July 2006 and hasn't initiated a rate hike cycle since 2004.
Now, LaVorgna's belief that the market is the tail wagging the Fed's dog isn't necessarily an outside view, but it is a somewhat surprising admission coming from a major Wall Street bank.
Currently, the Fed's dual mandate calls for it to focus on achieving full employment and price stability (which the Fed defines as 2% inflation). And while not part of its mandate, the Fed also strives to maintain financial stability.
In a speech last December, Lael Brainard, a member of the Fed's board of governors and a voting member of the Federal Open Market Committee — which votes on monetary policy decisions — said, "safeguarding financial stability is deeply ingrained in the mission and culture of the Federal Reserve Board. Today, financial stability is more important than ever to the work of the Federal Reserve Board."
And so on the one hand, we can't ignore that the Fed will look to the markets to gauge how much a change in its policy stance can be tolerated. On the other hand, the Fed's mandate is clear.
We're now about seven years past the outbreak of the financial crisis, though the Fed's zero interest rate policy is still very much a crisis-era positioning.
Last Friday, we learned that in August the unemployment rate fell to 5.1%, the middle of the Fed's range at which it would consider the economy at "full employment."
Inflation, however, remains stubbornly low, with "core" PCE, the Fed's preferred measure of inflation, running at around 1.2% annually in August.
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Socgen say they have the best trade if the Fed hikes next week
SocGen's Kit Jukes out with his latest on the Fed trade. Has he got it right?
Kit Jukes of SocGen has said in his latest note that the yen is the only currency to have rallied against the dollar following a Fed hike He also warns against shorting the yen on any BOJ actionHe's not alone in thinking that the dollar is unlikely to gain after the first hike. We're now at the stage where the market has accepted that hikes are coming. We're just arguing over the small print now of when.
I'm expecting a knee jerk jump in the dollar when they do raise and that may last a couple of sessions before the world and his mate decide to take profit.
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they can tell whatever they want - no rate hike!