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Hilsenrath Front-Runs Fed: Hints "Considerable Time" Language Will Remain
The last week has been dominated by sell-side strategists raising hawkish concerns about this week's FOMC with a focus on the drop of the "considerable time" language describing the period from the end of QE to the start of rate hikes. The Wall Street Journal's Fed-whisperer Jon Hilsenrath just dropped a rather large hint that that the "considerable period" language will remain... and bonds are rallying.
Via The Wall Street Journal discussion...
"The headline, when we read the statement tomorrow, the words "considerable time" are still going to be there."
However, Hilsenrath adds,
"but I think the comments will be qualified in the Yellen press conference that follows."
“Given the economic backdrop, they don’t want to send a signal right now that rate increases are imminent,” Hilsenrath said. “I think what they do, at the end of the day, is they qualify it.”
But the Fed is also focusing on its bond-program exit strategy, which is likely a main focus at its meeting Tuesday and Wednesday.
“One of the headlines they’re going to come out with I expect to be formalizing some of their exit plan,” Hilsenrath said. “It becomes, in their mind, a lot for the market to digest if they announce their exit strategy and change their guidance at the same time.
“It’s why I think, on the guidance front, they qualify and leave the hard decisions off for another day.”
* * *
The market reacted exuberantly - along with China's QE headlines. However, not everyone agrees despite Hilsenrath's fed-whisperyness...
Fed expected to adopt more hawkish stance at Sept. 16-17 meeting, debate whether to drop “considerable time” language from statement, based on published research.
Barclays
- Fed expected to take “modestly hawkish” tone at meeting, Barclays strategists led by Rajiv Setia wrote in report
- “Dovish dots” seen moving higher, press conference will have “subtle shifts” in tone
- Fed likely to retain “considerable time” language; if dropped, “front end should get hurt” and “10/30 curve should still flatten”
BofAML
- First rate increase now seen as occurring next June vs. Sept. 2015, economist Ethan Harris wrote in note
- Growth has been stronger than expected, while inflation is in line with Fed’s forecast
- Fed could drop reference to “considerable time”
Jefferies
- Fed statement to be “somewhat more hawkish” than in past, economists Ward McCarthy, Thomas Simons wrote in note
- FOMC meeting will fail to clarify ambiguity over timing of rate lift-off
JPM
- First rate increase is now expected next June vs 3Q 2015, economist Michael Feroli wrote in note
- Sees 25bps increase in Fed funds corridor to 25bps-50bps; subsequent moves in Sept. and Dec., bringing corridor to 75bps-100bps by end of 2015
Market Securities
- Fed to modify “considerable time,” cut QE by another $10b, strategist Christophe Barraud wrote in note
Morgan Stanley
- Fed’s 2017 dots may prompt curve shifts, strategists led by Matthew Hornbach wrote in note
- “Stage is set for some disappointment” if Fed doesn’t change “considerable time” language
Renaissance Macro
- Fed’s more hawkish outcome may be priced into markets now, economist Neil Dutta wrote in note
- “We cannot be entirely sure” how hawkish FOMC meeting will be
SGH Advisors
- FOMC may change forward guidance language, CEO Sassan Ghahramani wrote
- Growing number of FOMC members appear to be pressing for change
Standard Chartered
- FOMC meeting to have “moderately hawkish tone,” economist Thomas Costerg wrote in note
- Fed members will note downward trend in unemployment rate, healthy payroll growth
- “Considerable time” expected to be removed
TD
- Fed to change “considerable time wording, take more hawkish tone, Eric Green, head of U.S. rates and economic research, wrote in note
- Fed policy is set to become more flexible, retain message that there will be slow path to normalization
Source: Bloomberg
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I wonder what the Fed's target for the market is?
EURUSD spiked as well.
hilsenrath is correct.....this is exactly the same scenario as when every one thought bernanke was going to announce tapering the first time, the language will not be dropped until EOY
No shit, John.*
Ah, to be the mouthpiece now that Russia's here
*Global economy sucks hind tit, gets the hairy end of the lollipop, the 4 Horsemen for all intents and purposes are upon us, the thin veneer of civilization has disappeared and the center has come unwound and people still play this game about will they or will they not?
Holy Ka Schmolie, we're surrounded by idiots!
How can this be legal?
But there is a recovery knuckles, honest! That's why everyone is shitting their pants over the mere rumor of a rate hike, because the economy is so healthy! Escape (from reality) velocity has been achieved.
Jon 'I have the Power to move markets' Hilsenrath...
DavidC
Jon is sooo desperately trying to stay relevant.
It's hard for a gay man to get the the scoop from Milkshake Yellen.
He's a gay man and a gay journalist.
He really should start covering the White House. He may just find a friend.
AIPAC will wipe his ass all day as long as John continues to play softball with Mr. Yellen
the desperation is that the MSM is creating a frenzy around two fucking words........again!......mission accomplished!
Hilsenwhore!
He sold his soul to the devil! It looks like he's Yellen's whore just as he was Bernanke's! Bernanke's whore!
Is he gay? Is it relevant if he's a dick?
DavidC
If you want to know what the Fed's target for the market is, you have to ask their software developers.
Charles Evans of the Chicago Fed said at least an S&P 2200 by the end of 2014 and up another 8% by the end of 2015.
The Federal Reserve intends to print like a Mofo and buy treasuries until the US dollar crashes.
That's why all this Fed taper talk is just BS.
After the US dollar dies it's onto IMF SDRs.
And they still don't realise (or don't care) that their actions have exactly the opposite effect on the general people to that which is 'intended'.
Pathetic bunch of fuckwits.
DavidC
Did dickhead release the Feds "trailer" a day early to jump-start a bond rally????
Rigged
It's been a "considerable time" since the US economy was captured by a bunch of Jekyll Island banksters... About 101 years give or take a couple of months
wow, what a surprise! /s
If you are a sea turtle which was born today....you may see in your lifetime...a rate increase.
Yeah, pretty much. "Everything is rallying." Let's Party like its France in 1789!
Seriously though...know everyone here has had it with El Douche but you have to admit...when it comes to war...he wants no part of it.
That won't stop the Navy of course. "That's why they call it Admiralty."
Everything rallying?
DOLLAR DUMPING. Look at FX fer fuck's sake.
Betcha I know what China is really doing with all that fresh creamy Yuan dumped on their TBTF...
Yea!...considerable...something...qualif?....*khzzzzznnnnn*....huh?.....snchzzz....
7 trillion and more available.
BTFD
Is the bottom in for gold?
Should he not be sent to Gitmo for some ole fashioned questioning on where he gets his info from?
yellen doesn't want to get punk'd when long end yawns if she raises overnight rate.
what a circus. they really need to tell us all via him?
William Dudley of the NY Fed has to tell his monkey, Hilsenrath, what to say.
The current Federal Reserve is not your father's Federal Reserve.
It's Janet Yellen's and Bill Dudley's Laugh-In.
Phew, may we all live to see another day. I'm just so glad the top 1% can keep their party going. It's not even like they're spending OPM. NO, they're spending money from nothing for nothing. As long as they only shop at Tiffany's, buy Bentleys and Megayachts, the rest of us doesn't have to worry! They're not competing at our level and just because they're super rich, doesn't mean they will eat as much as they're "worth". There is still enough for everyone else!
Good times for everyone!... Happily Ever After!
How about this is a planned 'volatility enhancer', blameable on the press, but wanted by the Fed ...
So either way bonds rally? If rates get raised everyone plies in for higher yield, and protection from an equity selloff.
If the Fed. keeps rates low for a "considerable time", everyone piles in because the Fed. has their back.
~ Heads I win... Tails you lose ~
This is more kabuki theater.
They will do nothing with rates.
1.5 basis points? Look out!
Yes because 6 YEARS is not a "considerable period" of time. Like I've said before rates rise in the third quarter of never. If by chance I'm wrong, FED FUNDS top out at 1-1.25. Before the next 10 trillion dollar crisis.
"Considerable time" = "We have no fucking idea, and if we did, we wouldn't tell you."
It's easy for puppets to dance to the tune of their masters
It's not so much front running as it is rear ending
LOL!!! < shocker > fuck, I should have bought more EUROs...