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Hilsenrath Speaks: Fed Will Proceed With Rate Hikes "Later In The Year"
Earlier today, the clueless French president Francois Hollande caused a stir when he confirmed what everyone else had known: central banks around the developed world are anything but independent, and constantly leak their imminent policy actions to the well-connected, or in his case, leaders of socialist utopias. To wit, first this:
- HOLLANDE SAYS ECB TO PROVIDE SIGNIFICANT LIQUIDITY TO ECONOMY
This immediately caused much confusion and anguish as it put the ECB in a very uncomfortable spot, one where Draghi has to preclear not only with Merkel (which is understandable - after all without Germany there is no Eurozone), but also with Hollande, who just happens to be the head of the "sick man of Europe", which in turn is a direct hit on the reputation of Mario Draghi himself. Sure enough, a few hours later Hollande followed up with:
- HOLLANDE WAS REFERRING TO 'HYPOTHESIS' ON ECB QE DECISION
It is unclear which is more embarrassing: that the narrative is failing so blatantly now, and nobody can even remember how to lie accurately, or Hollande's attempt to save face and preserve some faith in the Frankfurt money printing shamans.
However, one thing is clear: "surprises" like the SNB shocker from last Thursday will no longer be tolerated, especially if the 1% stands to lose real money, so the leaks by central banks will continue even as said central banks are increasingly more clueless about what they need to do.
In any event, it is now confirmed that in addition to printing money and crushing the middle class (see "Spot The Trend: The Richest 1% Are About To Own Over Half Of Global Wealth") central banks do one thing and one thing well: leak their decisions in advance to policitians: who, at least in the US, have full legal right to trade ahead of the public on such material non-public information. And some idiots still think the market is fair, unrigged and efficient.
So back to the topic of central banks leaking, we find that the Fed's own favorite mouthpiece Jon Hilsenrath (for more see "On The New York Fed's Editorial Influence Over The WSJ"), just released a piece in which he claims, or rather his sources tell him, that the Fed is "on track to start raising short-term interest rates later this year, even though long-term rates are going in the other direction amid new investor worries about weak global growth, falling oil prices and slowing consumer price inflation."
In other words, just like the ECB in 2011, the Fed which has hinted previously that it will hike rates just so it has "dry powder" to ease once the US economy falls into recession, will accelerate a full-blown recession in the US when it does - if indeed Hilsenrath's source is correct and not merely trying to push the USDJPY higher (for reference, see Reuters "exclusive" report on the Samsung takeover of Blackberry, denied by both parties within hours - hike some time this summer.
So what calendar of events can one expect? According to the WSJ "no moves for at least the next two meetings—or not until June at the earliest, they have indicated in recent public statements and interviews. At the same time they aren’t likely to signal an alarm about developments abroad that would indicate a meaningful shift in their plans."
For now the Eurodollar/Fed Funds market, tired of being raped year after year by Bernanke and Yellen with promises of "imminent rate hikes", is no longer buying it: "Some investors have been betting the Fed will hold off on rate increases. In fed funds futures markets—where traders stake out positions on the expected Fed target rate—the average expected rate for the month of June has drifted down from 0.20% to 0.16% since the beginning of the year, a sign investors in these markets see a diminished likelihood of a midyear rate increase." Ironically in the past Fed Funds had repeatedly been on the Fed's side in seeing a recovery only to lose massive amounts of money. It will be ironic if FF futures are now caught on the wrong side of the trade again, when the Fed does begin a brief and ill-advised hiking cycle.
And anyway, why is the Fed so confident it can hike rates without causing a massive market crash? Simple: it hopes that the QE about to be launched by the ECB will provide sufficient "flow" offset to mitigate the implicit tightening by the Fed:
While European officials are near launching a new bond-buying program known as quantitative easing to boost feeble growth and low inflation, Fed officials are generally upbeat about U.S. economic prospects. U.S. inflation is below the Fed’s 2% objective, but the unemployment rate fell—to 5.6% in December, which many Fed officials take as a sign that wage and price pressures could be building in the domestic economy. They have held short-term rates near zero since December 2008 and want to start moving them up before those pressures gather force.
So is it all engines go? Not really, because while the Fed is increasingly ignoring any data to come out of the BLS for the simple reason that it is politically goal seeked to make Obama's administration look better when in reality just shy of a record number of Americans are still on foodstamps, an all time high 93 million Americans have left the labof force thereby leading to an abnormally low jobs number, and the bulk of jobs gained in the 'recovery' have been low-paying wages all of which are about to be crushed by the high-paying shale sector collapse, Fed officials are looking at the 10 Year, yielding well below 2%, and basis points above its all time low, and asking questions:
One worrying development for Fed officials is a drop in yields on 10-year Treasury notes below 2%. Boston Fed President Eric Rosengren said in an interview last week the decline raised questions about whether investors believe the Fed’s forecast that inflation will rise toward 2% in coming years. Treasury yields tend to move in line with inflation. If investors believed inflation was set to rise, yields on government bonds would be rising, not falling.
On the other hand, the Fed appears to have finally figured out what we have been saying since 2009: that all the market is doing is frontrunning central bank purchases of increasingly scarce treasury "high-quality collateral" which is the primary reason why yields will without doubt continue ever lower as the Fed noted in its most recent minutes (see "Fed Finally Admits Frontrunning Of Central Banks Is What Moves Markets")
In their discussion of financial market developments, participants observed that movements in asset prices over the intermeeting period appeared to have been importantly influenced by concerns about prospects for foreign economic growth and by associated expectations of monetary policy actions in Europe and Japan.
Hilsenrath notes as much:
But other officials believe the drop in bond yields is being caused primarily by global capital flows–most notably a rush of investors into U.S. assets and out of lower-yielding European investments. These officials are prepared to look through the drop in bond yields for now until there is more convincing evidence U.S. inflation has taken a sustained turn lower.
In other words, the ongoing decline in the long-end is nothing short of the market frontrunning other central banks' direct and indirect monetizations of US paper, even as the Fed prepares to raise the short-end.
So does this mean that 9 to 12 months from now the short end will be rising in 25 bps increments even as the central banks elsewhere around the world are pushing their own rates ever more negative and/or rushing to monetize ever more of the declining amount of quality collateral left in the private market, and are we finally going to get that last and most visible indicator of an imminent recession, the inverted yield curve?
The answer is most likely yes, but don't worry: the US finally admitting it has slid into a recession will be promptly spun as bullish: after all it will mean that a full business cycle has come and gone, and give the Fed green light to resume doing what it does best: print.
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Just more lies and propaganda to keep the dollar strong even as the US economy weakens from severe job losses due to plummeting oil prices
Not to mention, an already weak real estate market will be destroyed by rising rates.
Hilsenunrath. Why anyone listens to this wanker is beyond me.
Going to have to send you guys back to Political Correctness School.
Jawboning is properly known as a primary policy tool in a managed society.
A raise in rates, he says? We must be at DEFCON 2!
Later in the year?
Did anyone bother to ask him which year?
[Ain't gonna happen. ZIRP (& NIRP) forever!!!]
"In other words, just like the ECB in 2011, the Fed which has hinted previously that it will hike rates just so it has "dry powder" to ease once the US economy falls into recession, will accelerate a full-blown recession in the US when it does [...] hike some time this summer."
<rimshot>
Jawboning is a Legitmate Policy Tool?
Except when the Swiss National Bank contradicts its jawboning by abandoning its peg to the Euro, scalding the Swiss Franc shorts, then its an OUTRAGE!!!!!!!!
why is he so reminiscent of little gay timmy ?
Pewblik Skewelz
Potemkin Planet...
The check is in the mail.
I won't put it in your ass this time, i promise.
Rates will go up in six months.
Rates are going up soon.
We are going to have to raise the rates of some folks.
Next month, when rates are raised...
It's not propaganda
The Feral Reserve MUST raise rates soon to help stall China from doing an SNB style dump of the US dollar vs the Yuan.
Cause if the dollar loses value, no foreign banks will buy US Treasuries which would destroy the US financially and militarily.
We are not there yet!
So China (a nation that depnds on exports to survive) dumps the dollar and causes the yuan to skyrocket, as well as their larget trading partner to no be able to afford their (heretofore) cheap shit at Wal Mart.
Sounds like a winner to me.
I've said this same thing many times. The Chinese wouldn't benefit from upsetting the order of things right now. No gold backed currency, no intentional take down of the dollar( it will happen eventually, but it will probably be self inflicted). The Chinese need us and Europe to sell their cheap shit too. There isn't another group of people othe there to buy it. There are other populations large enough, but they have their own slave labor and don't need the Chinese to make it. Without us and Europe, all those factories are going to shut down, and they are going to have 100 mil unemployed peasants to contend with. I'm not defending the status quo or saying its sustainable in any way, but the Chinese have their own problems and won't add to them by doing something like that. Their pretend growth would come crashing down with ours.
That's so cute- people still think the Fed has choices in this matter.....
That's so cute, you think the FED serves the little people and must protect them. You know nothing about the FED or their true mandate.
Hilsenrath isn't a journalist, he's a junior PR flunky.
No, he's like a shit stain in my grandson's diaper.
Go ahead raise the rates, and then all the derivatives go BOOM!
That's exactly the plan. Why do you assume the FED cares about you or the economy?
Will their number one debtor be able to pay the bills if they raise the rates? US debt currently at 18 trillion... or $300 trillion, whichever.
Good thing they suspended mark-to-market accounting rules and codified bail-in rules and engineered a scenario where the TBTF banks all have billions of "excess reserves" parked at the Fed that they can use to keep the lights on during a reset.
And you guys thought the elites weren't looking out for you!
If they raise the rate from 0.25 to 0.50 they will have "kept their word" and then it can sit there for another 3 years. It's not like they are planning to raise rates to 5%...
That was my thought as well, from 0.25 to 0.30 and high fives all around.
Maybe they can get a lackey to start talking about the Misery Index due to raising rates?
pods
Its all that "deflation fighting" they've been doing.
Its all good.
If prices start falling too much again they'll just nuke the dollar like they always do.
I think that is what they will do "see we raised the rates (a microscopic amount)!"
Headline: Fed doubles interest rates! (from 0.25 to 0.50). Then when things go south they can once again "halve" the rates back to 0.25. That could go on quite awhile.
Yawn... the economy is going to continue to suck and theyll say "Oh we cant raise rates just yet! Look at the eCONomy!" QE4 coming to a theatre near you....
"I knew it! I'm surrounded by assholes!"
Thank goodness we can hire professional investment advisors to explain these market fundamentals and to help us make sound investment decisions.
Boo yah!!
Think the FED will do QE4 now? Forget about it!
Think the FED is trying to save the economy?
Time to Wake up....
The Fed is as much now a political animal as it is an arm of global banking interests. Anything that would upset the current socio-political societal order will simply not be allowed to happen. And in some way shape or form, this is becoming increasingly 'known' by anyone who can reason.
We've been drained for as much as they can take legally and within this system's means. They're now having to print a trillion or more every few years to keep the system afloat and it will only get worse from here.
Time has come to pull the plug, and start the wars. Wars get rid of people, people they can't afford to feed anymore. Stop thinking they "must" do this or that to keep us happy.
These are FUCKING PSYCOPATHS, they don't give a fuck about you, and will start the wars the second it's expedient for them to do so.
Anagrams for Hilsenrath:
Rehash Lint -- Harsh Inlet
Just sayin'.
Rah shit, Len
HilsenTrash Talk
stupid is stupid does
Oh, there's a line we have never heard before - "rates will be raised later on". Will Santa's elves be running the powerpoint at those FOMC meetings? Maybe Peter Pan will be bringing the coffee?
Which year? We don't know but it will be later in that year.
Listen to all the terrified BTFD'ers rant and rave at the nightmare that their punchbowl is being taken away. Deny, deny, deny...it'll only guarantee you lose it all on the last "dip" that wasn't a dip.
How predictable, anyone who thinks this would go on forever doesn't understand who the FED is or who they serve. (Hint: NOT YOU)
Go ahead, raise rates. I dare ya...I double dog dare ya.
Wasn't always just about $buying time anyway...?
I don't believe you.
what utter Bollocks. NOT a chance the Fed raise rates this year nor next. Utter Bollocks.
ummmm.... cough.... bullshit... cough
Oh yeah, Yellen is just going to go all Paul Volcker and shit to 19% because the economy is so 'Strong like the bull'.....
I wonder what will happen to a bond market that DOESN'T have the FED backstopping it, if rates start rising and the whole bubblicious justification for bond buying (capital gains ala the 'greater fool') plan falls apart.
Fortunately we'll never have to find out. The minute things start sliding off the table, QE will be back on in it's "extra strength" variety, never to be turned off again.
it's never turned off, they just lied to us, again
righto .... monstrous deficit spending is a helluva sneaky drug .
They should stop calling them rates, they cannot be changed anymore.
no way they will rise rate or they should bankrupt many banks and countries in a few minutes
Definite proof that QE4 is coming soon.
there will be qe forever but you must define
"forever". "forever" is till the death of
fiat debt money. the system of contemporary "money"
has arrived at this point. it is the design and
interest, roll over, growth thing
requiring this manipulated "fix".
beating dead horses is exhausting and futile.
oh, man.
Ya, sure they will....
That's right, rates will go lower FOREVER.
QE will go on FOREVER.
In 200 years they'll still be lowering rates and working on QE 95.
Utter stupidity, no less stupid than the fools of 1929.
Exactly! Japan has been at this since the late 80's.
yes, yes and yes, sure, yes. must be, of course,
yes. that is alright, yes. and this goes on for
months into years and all the hangers on hang on.
so it goes and yes, of course.
of course you have noticed the inmates are running the
asylum. it is analogically identical to the advertisements
for premarin vaginal cream. they tell you that painful
menopausal intercourse, on t.v. i swear, can be "treated"
with this cream but you have to use it sparingly as you
may suffer womb cancer, heart failure and dementia with
overuse of the product. but, what the hell.
comfortable intercourse, without spit, is so
very essential to a complete and proper relationship.
no?
although you cannot make this shit up, some ass hole can;
and some other asshole will buy it.
Rates to be "normalized" at "extraordinarily low" rates.
Well, which is it?
Hell - Bullish! I'm in.
I don't think the Fed cares how the Obama Adminsitration looks. I don't think they work for Obama, rather, both the Fed and Obama work for the same employer behind the scenes. I think they will raise the rates by some token amount, but find the consequences too horrid.
they have an old, axiomatic phrase for that.
"the show must go on." ...
Hilsenrath, your so full of crap.
Hilsenrath is merely a court jester sent out to provide some eye candy. The Fed is going to do both ... I am not kidding. They will rauise interest rates .25% and print more.
You see this is the perfect solution. Yelen will say that higher interst rates means that US economy is returning to normal, and additional printing is only temporary so that means its still "normal".
These feckin neo Bolsheviks are just trying to change the meaning / understanding of words. What is "normal" .. what are "interest rates" ? Are negative intrest rates "normal" ? Of course not ! BUt the LSM will be out in force to declare what a briliant move by Yellen - to raise interest rates while providing liquidity to the economy by printing money.
Brilliant ! Until the shooting begins.
Which year?
Maybe later in 2050. So they're not really lying.
cork this arsewhole !
C'mon, Janet. Do it! Do what they sent you to do! There's the sword. There ya go.
I'm still flummoxed by the idea that the Fed hasn't asked itself the question: what happens after (if) we reach max employment and 2% inflation? Does policy normalization begin, undoing everything it has risked so much to achieve? does the economy magically reach a state of nirvana where it remains strong despite Fed tightening, which it has never done? or does it slide back into the typical business cycle benefits-consequences timeline it always has?
shooting from the hip is easy when you're aiming for the side of a barn, but it doesn't work too well with a moving target.
Has it occoured to you that The FED might not give a fuck and is pretty much assured by capture of the government/regulatory apparatuses that it is going to do just fine for itself and it's own cartel upper management/largest shareholders no matter what the fuck happens to the economy?
Even IF the Bankser/Gamblers lose their asses the .GOV/Taxpayer backstops are gonna be tapped to make them whole.
Heads they win. Tails you lose. Why should they care about anything else as long as that is the status of the quo?
Hey Hilsencunt, go choke on a bag of dicks. This is January 19th, they've been promising to raise rates for 5-6 years now. Later in the year, what a fucking POS shyster double speak.
-Everyone
Let's just say I have this friend that works somewhere in the real estate industry and got stuck sitting next to the big boss at the office Christmas party. Big boss said "Interest rates are going to go up this year!" friend said "They've been saying that for the past 5 years." Big boss said "No really, they will!" These dumbasses believe their own propaganda.
It's never been a better time to buy! You gotta get in before the rates rise!
Hilsenrath might be talking to -essentially threatening- some foreign banks; likely the ECB and/or the BOJ..
The Swissy Fit might have caused some problems within the TBTF cartel that are requiring serious FED intervention behind the scenes.
AIG proved that winnings can't be collected from bankrupt counterparties without those bankrupted counterparties being backstopped with taxpayer money and laws being broken. The AIG hearings have been pretty revealing as to the level of .GOV bureaucratic complicity in funneling money to Investment banks like Goldman Sachs
I don't think that the American Citizenry are much in the mood to be told that the Gamblers need TARP 2.0 right now...
This may one of an unsubtle hint that foreign CBs, specifically the BOJ nd ECB had better keep to the program of scheduled coordinated round-robin debasements, mutual purchases of government debt and equities markets support -OR ELSE.
We will ignite the markets by buying all the corporate debt! Why are people not spending? We will ignite the markets by raising interest rates soon! Why are people not spending? We will ignite the markets by paying the banks to keep their money in the big bank! Why are people not spending?
Did anybody give people any money? Noooo, we are busy finding new ways to take more money from people. Here, buy this car on a 10 year note at 6 percent when it cost me nothing to get this money. Improve your life with more educations, we will loan you money at 6 percent that is free to us. You too sick, we will let you buy insurance with 500 copay to ER.
No activity in topdown economy when bottomup people are imporverished. Is rocket surgery?
Joe sixpack is too fucking scared of losing his Ford F-150 and having the ESPN shut off to ask questions.
He takes his handout.
Elon Musk just wants the government to continue subsidizing his electric toys for rich douchebags.
He takes his handout.
There isn't much left of anything in the middle to fight about...