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Fed "Accidentally" Released Dovish Confidential Market-Moving Forecasts, Blames "Glitch"

Tyler Durden's picture




 

First The 'unaudited' Fed leaks its FOMC minutes. Then they leak 'inside-information' to Nikkei's latest addition, Medley Global advisors (and remain "above the law" with regard consequences. And now, The Fed admits it leaked full blown confidential economic projections (due to a code glitch), whose summary assessment is shown below as per the leaked file.

While superficially, and as expected, the Fed is assuming a 1.26% fed funds rate in one year, suggesting about 3-4 rate hikes until then, with the first one according to the leaked documents taking place in Q3:

... the overall strength of the economy is well weaker, and thus more dovish, than many of the permabulls had expected.

As Bloomberg notes,

  • *FED SAYS IT INADVERTENTLY RELEASED STAFF ECONOMIC PROJECTIONS
  • *FED SAYS PROJECTIONS POSTED TO PUBLIC WEBSITE ON JUNE 29

The leaked projections were:

  • *FED STAFF PROECTIONS SHOW YEAR-END FED FUNDS OF 0.35% 2015
  • *FED STAFF PROJECTIONS SEE FED FUNDS AT 1.26% 4Q 2016
  • *FED STAFF PROJECTIONS SEE GDP 2.31% 2015, 2.38% 2016

And these are the key projections as revealed in the leaked file (ZIP file can be found here). Note that the Fed expects a long-term 10Y rate of 4.25%, and potential GDP output to renormalize by 2020.

 

Or in other words, quite more dovish than anyone expecting a strong, "escape velocity" surge in the economy had hoped for: certainly far weaker than what an imminent rate hike suggests.

The impact of the "glitch" on the bond market can be seen the moment it hit by this dramatic move in the 2Year:

 

As for the reason for the leak - simple - same as every other leak - a technical "glitch":

Economic projections prepared by Federal Reserve Board staff as background for the June 16-17, 2015, meeting of the Federal Open Market Committee (FOMC) were inadvertently included in a computer file posted to the Board's public website on June 29. Because the information has already been released, the Federal Reserve is today providing general public notification and making those projections more easily accessible on our website within the FRB/US model package (ZIP) data folder.

 

Approximately every three months, Federal Reserve Board staff update and publish on the Board's website a package of computer code of the Board staff's FRB/US model of the U.S. economy, including a set of illustrative economic projections based only on publicly available information.

 

On June 29, an updated package of code was posted that inadvertently included three files containing staff economic forecasts that are confidential FOMC information. Two files contained charts of the staff's projections for economic variables such as the unemployment rate, the core inflation rate, and gross domestic product growth as well as the staff's assumption for the path of the federal funds rate target selected by the FOMC. Another file contained computer code used to generate a table displaying staff economic projections.

 

The projections that were inadvertently released are staff projections that do not incorporate policymakers' views, including their views on monetary policy. Policymaker views were set forth in the monetary policy statement and projection materials released on June 17 and in the minutes of the June FOMC meeting and the Summary of Economic Projections published on July 8.

 

Consistent with the procedures in the FOMC's Program for Security of FOMC Information, this matter has been referred to the Board's Inspector General.

But do not worry - despite the fact that they cannot upload a zip file in a timely manner, they are fully in charge of the world's economic future.

 

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Fri, 07/24/2015 - 13:47 | 6349771 franzpick
franzpick's picture

TD: stocks are entering freefall. Can you give us the gory details?

Fri, 07/24/2015 - 13:48 | 6349775 Youri Carma
Youri Carma's picture

How convenient. Now the market is suppose to front-run the FED so that the FED doesn't have to do so much in the beginning.

Fri, 07/24/2015 - 14:46 | 6350095 pebblewriter
pebblewriter's picture

My thoughts exactly. They don't want to raise rates, they just want them to BE higher so they have room to lower them.

Fri, 07/24/2015 - 13:54 | 6349789 ejmoosa
ejmoosa's picture

How long before we can End the Fed?

How many single points of failure can we build into any system?

The Fed is going for the all time record here.

Fri, 07/24/2015 - 13:54 | 6349812 Joebloinvestor
Joebloinvestor's picture

Will she resign first or be indicted?

What a fucking low life and on two counts!

Fri, 07/24/2015 - 16:34 | 6350540 Stormtrooper
Stormtrooper's picture

Yellen or Hitlary?

Fri, 07/24/2015 - 17:59 | 6350853 Crocodile
Crocodile's picture

The Lois Lerner way; nice bank account after dismissal & all investigations and legitimate charges dismissed.

Fri, 07/24/2015 - 14:16 | 6349933 Grumbleduke
Grumbleduke's picture

aren't you all tired of all this shit?

I am.

Fri, 07/24/2015 - 14:27 | 6349937 franzpick
franzpick's picture

Basic materials XLB, retail XRT, Au, Ag, Dr. Copper and many others, already making or about to make 6 month or longer term lows, are undeniably discounting the oncoming collapse:

http://bigcharts.marketwatch.com/quickchart/quickchart.asp?symb=xrt&insttype=&freq=1&show=&time=7

Fri, 07/24/2015 - 14:19 | 6349950 monad
monad's picture

There are no accidents in politics  FDR, poisoned

Fri, 07/24/2015 - 14:27 | 6349995 Madcow
Madcow's picture

Its going to take at least 10 years to sort out the bankruptcy of China, Europe, Japan. 

the US Dollar will continue to increase in value - and eventually - Americans will be able to buy up the world's assets at pennies on the dollar from desperate and starving people who will do anything to get their hands on real cash.  (USD) 

 

Fri, 07/24/2015 - 14:27 | 6349996 Madcow
Madcow's picture

Its going to take at least 10 years to sort out the bankruptcy of China, Europe, Japan. 

the US Dollar will continue to increase in value - and eventually - Americans will be able to buy up the world's assets at pennies on the dollar from desperate and starving people who will do anything to get their hands on real cash.  (USD) 

 

Fri, 07/24/2015 - 14:27 | 6349998 Madcow
Madcow's picture

Its going to take at least 10 years to sort out the bankruptcy of China, Europe, Japan. 

the US Dollar will continue to increase in value - and eventually - Americans will be able to buy up the world's assets at pennies on the dollar from desperate and starving people who will do anything to get their hands on real cash.  (USD) 

 

Fri, 07/24/2015 - 14:36 | 6350040 ms8173
ms8173's picture

If that happens then you can guarantee the United States is going down.  We are a consumable nation that relies on products that are manufatured in China.  If the China Economy implodes.....it's because the US demand is in the Tank.

 

Tank about it!!!!!  lol

Fri, 07/24/2015 - 14:41 | 6350066 bluskyes
bluskyes's picture

"computer glitch", right.

PEBKAC

Fri, 07/24/2015 - 15:01 | 6350163 Conax
Conax's picture

Glitches Get Stitches, Bitchez.

Fri, 07/24/2015 - 15:12 | 6350215 scatha
scatha's picture

ACCIDENT MY ASS. IT WAS TO MANIPULATE STOCKS. AND FAILED.

NOBODY IS LISTENING TO GRANDMA ANYMORE. SEND HER TO SHADY PINES.

Fri, 07/24/2015 - 15:15 | 6350226 Keltner Channel Surf
Keltner Channel Surf's picture

My weatherman accidentally released next year's forecast, but I'm not buyin' a raincoat yet ...

Fri, 07/24/2015 - 16:00 | 6350393 Crocodile
Crocodile's picture

The FED cannot raise rates unless they intentionally want to implode the economy, which they might if they can find a false-flag escape goat.  Perhaps a man-made "natural disaster" as Napolitano was so dogmatic about as she/he left the DHS in August of 2013. (these things happen within 2-3 years of said projection)

http://www.rt.com/usa/janet-napolitano-farewell-speech-084/

--------------

Also, expect the plunge protection team to be in full "farce" next week; go long I say.  Unless that earthquake devastation ocurrs, then hit the stores and the bank. https://www.youtube.com/watch?v=jtyrYre9Et8

Fri, 07/24/2015 - 16:06 | 6350425 LetsGetPhysical
LetsGetPhysical's picture

Handcuffs or GTFO

Fri, 07/24/2015 - 16:45 | 6350571 Goldbugger
Goldbugger's picture

They can't raise rates, the whole ponzy scheme will collapse. We are the new Japan.

Fri, 07/24/2015 - 17:44 | 6350795 presidentsarkozy
presidentsarkozy's picture

AN OBSERVER FROM THE MOTHER COUNTRY NOTES:

JANET YELLEN S HEAD APPEARS TO BE BIGGER THAN THE WHOLE OF THE REST OF HER BODY.

PERHAPS SHE NEEDS IT TO ACCOMODATE A BRAIN BIG ENOUGH TO ALLOW HER TO BE FED CHAIR (?)

Fri, 07/24/2015 - 19:58 | 6351204 honestann
honestann's picture

I wonder whether this "leak" was an intentional head-fake.

Why?

Because the world economy is obviously entering the massive collapse phase.  So maybe they knew they couldn't possibly raise rates [for years], but still want to pretend they can.

If the leak was not intentional, they must know better by now.

But they won't admit, so their insider friends can clean up.

Fri, 07/24/2015 - 21:15 | 6351448 Sa1xxxxx
Sa1xxxxx's picture

So desperate to find a fix they are resorting to inside out trading

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