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Hilsenrath Front-Runs Fed: Hints "Considerable Time" Language Will Remain

Tyler Durden's picture




 

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."

The question is how.

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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Tue, 09/16/2014 - 12:10 | 5223061 Jahbulon
Jahbulon's picture

I wonder what the Fed's target for the market is? 

Tue, 09/16/2014 - 12:12 | 5223074 Stackers
Stackers's picture

EURUSD spiked as well.

Tue, 09/16/2014 - 12:14 | 5223088 spastic_colon
spastic_colon's picture

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

Tue, 09/16/2014 - 12:29 | 5223161 knukles
knukles's picture

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!

Tue, 09/16/2014 - 14:45 | 5223612 max2205
max2205's picture

How can this be legal?

Tue, 09/16/2014 - 17:25 | 5224227 hobopants
hobopants's picture

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.

Tue, 09/16/2014 - 17:19 | 5224208 DavidC
DavidC's picture

Jon 'I have the Power to move markets' Hilsenrath...

DavidC

Tue, 09/16/2014 - 12:12 | 5223081 TruthInSunshine
TruthInSunshine's picture

Jon is sooo desperately trying to stay relevant.

It's hard for a gay man to get the the scoop from Milkshake Yellen.

Tue, 09/16/2014 - 12:16 | 5223094 potato
potato's picture

He's a gay man and a gay journalist.

Tue, 09/16/2014 - 12:23 | 5223126 Grande Tetons
Grande Tetons's picture

He really should start covering the White House. He may just find a friend. 

Tue, 09/16/2014 - 13:07 | 5223286 Zeptemberalevin
Zeptemberalevin's picture

AIPAC will wipe his ass all day as long as John continues to play softball with Mr. Yellen 

Tue, 09/16/2014 - 12:27 | 5223141 spastic_colon
spastic_colon's picture

the desperation is that the MSM is creating a frenzy around two fucking words........again!......mission accomplished!

Tue, 09/16/2014 - 13:34 | 5223344 sbenard
sbenard's picture

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!

Tue, 09/16/2014 - 17:19 | 5224212 DavidC
DavidC's picture

Is he gay? Is it relevant if he's a dick?

DavidC

Tue, 09/16/2014 - 12:26 | 5223144 q99x2
q99x2's picture

If you want to know what the Fed's target for the market is, you have to ask their software developers.

Tue, 09/16/2014 - 12:50 | 5223234 yogibear
yogibear's picture

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.

Tue, 09/16/2014 - 17:23 | 5224218 DavidC
DavidC's picture

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

Tue, 09/16/2014 - 12:10 | 5223063 Debeachesand Je...
Debeachesand Jerseyshores's picture

Did dickhead release the Feds "trailer" a day early to jump-start a bond rally????

Tue, 09/16/2014 - 12:10 | 5223068 max2205
max2205's picture

Rigged

Tue, 09/16/2014 - 12:27 | 5223145 Cacete de Ouro
Cacete de Ouro's picture

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

Tue, 09/16/2014 - 12:12 | 5223077 buzzsaw99
buzzsaw99's picture

wow, what a surprise! /s

Tue, 09/16/2014 - 12:12 | 5223079 Grande Tetons
Grande Tetons's picture

If you are a sea turtle which was born today....you may see in your lifetime...a rate increase. 

Tue, 09/16/2014 - 12:20 | 5223110 disabledvet
disabledvet's picture

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."

Tue, 09/16/2014 - 12:27 | 5223138 ThroxxOfVron
ThroxxOfVron's picture

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...

 

Tue, 09/16/2014 - 12:12 | 5223080 somecallmetimmah
somecallmetimmah's picture

Yea!...considerable...something...qualif?....*khzzzzznnnnn*....huh?.....snchzzz....

Tue, 09/16/2014 - 12:22 | 5223116 q99x2
q99x2's picture

7 trillion and more available.

BTFD

Tue, 09/16/2014 - 12:23 | 5223117 Australian Economist
Australian Economist's picture

Is the bottom in for gold?

Tue, 09/16/2014 - 12:24 | 5223120 Infinite QE
Infinite QE's picture

Should he not be sent to Gitmo for some ole fashioned questioning on where he gets his info from?

Tue, 09/16/2014 - 12:28 | 5223157 Bell's 2 hearted
Bell's 2 hearted's picture

yellen doesn't want to get punk'd when long end yawns if she raises overnight rate.

Tue, 09/16/2014 - 12:38 | 5223201 huggy_in_london
huggy_in_london's picture

what a circus.  they really need to tell us all via him?

Tue, 09/16/2014 - 13:00 | 5223266 yogibear
yogibear's picture

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.

Tue, 09/16/2014 - 13:15 | 5223313 walküre
walküre's picture

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!

Tue, 09/16/2014 - 13:52 | 5223446 DOGGONE
DOGGONE's picture

How about this is a planned 'volatility enhancer', blameable on the press, but wanted by the Fed ...

Tue, 09/16/2014 - 14:19 | 5223541 Yen Cross
Yen Cross's picture

      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 ~

Tue, 09/16/2014 - 14:26 | 5223557 JRobby
JRobby's picture

This is more kabuki theater.

They will do nothing with rates.

Tue, 09/16/2014 - 14:55 | 5223654 Hohum
Hohum's picture

1.5 basis points?  Look out!

Tue, 09/16/2014 - 15:09 | 5223706 nakki
nakki's picture

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.

Tue, 09/16/2014 - 17:18 | 5224203 ebworthen
ebworthen's picture

"Considerable time" = "We have no fucking idea, and if we did, we wouldn't tell you."

Tue, 09/16/2014 - 17:25 | 5224234 Fuku Ben
Fuku Ben's picture

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

Tue, 09/16/2014 - 17:30 | 5224247 LawsofPhysics
LawsofPhysics's picture

LOL!!!  < shocker >  fuck, I should have bought more EUROs...

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