Fed Chickens Out Again, Fails To Raise For 55th Consecutive Time - FOMC Statement Comparison

Tyler Durden's picture

Goldman wins again.

With a 54-0 record without a rate hike (better than Floyd Mayweather's), and 58 Economisseds expecting no change, 3 a half-pregnant 13bps hike, and 53 expecting a 25bps hike, The Fed was always going to break someone's heart today. Bond yields and the USD were tumbling into the decision, which appeared correct as The Fed chickened out again...

  • **FOMC: NO POLICY CHANGE, 0-0.25% TARGET 'REMAINS APPROPRIATE'
  • **FOMC: GLOBAL ECON,FIN EVENTS 'MAY RESTRAIN ECON ACTIVITY'
  • **FOMC: VOTE 9-1; LACKER DISSENTS, WANTED 25 BPS HIKE

Given the "no hike", it is clear that, as we noted, Goldman is still in charge and Hilsy is still leaker-in-chief. All eyes now on the dot-plots as The Fed desperately tries to regain some credibility, stifle uncertainty, and calmly reassure markets that "we've got your back."

Pre-FOMC: S&P Futs 2000.5, 10Y 2.26%, 2Y 77.5bps, EUR 1.1330, Gold $1118

Additional headlines include:

  • **FOMC LOWERS L-RUN EQUILIBRIUM FFR EST TO 3.5% V 3.8% JUNE
  • **FOMC: 11 PARTICIPANTS SEE FFR BELOW 0.5% END 2015 VS 7 JUNE
  • **FOMC: ECON WILL EXPAND MODERATE PACE W/ 'APPROPRIATE' ACCOM
  • *FOMC: LABOR MKT IMPROVED,'SOLID' JOB GAINS, UNEMP DECLINING
  • *FOMC: ONE PARTICIPANT SEES NEGATIVE FFR END-2015 & END-2016
  • *FED: MKT-BASED MEASURES OF INFLATION COMPENSATION MOVED LOWER

Here are the key changes to the statement, which confirm the Fed's third mandate is now official: global stability:

Information received since the Federal Open Market Committee met in June indicatesJuly suggests that economic activity has beenis expanding moderately in recent months. Growth inat a moderate pace. Household spending has been moderate and business fixed investment have been increasing moderately, and the housing sector has shown additional improvementimproved further; however, business fixed investment and net exports stayedhave been soft. The labor market continued to improve, with solid job gains and declining unemployment. On balance, a range of labor market indicators suggestsshow that underutilization of labor resources has diminished since early this year. Inflation has continued to run below the Committee's longer-run objective, partly reflecting earlier declines in energy prices and decreasingin prices of non-energy imports. Market-based measures of inflation compensation remain lowmoved lower; survey?-based measures of longer-term inflation expectations have remained stable.

Consistent with its statutory mandate, the Committee seeks to foster maximum employment and price stability. Recent global economic and financial developments may restrain economic activity somewhat and are likely to put further downward pressure on inflation in the near term. Nonetheless, the Committee expects that, with appropriate policy accommodation, economic activity will expand at a moderate pace, with labor market indicators continuing to move toward levels the Committee judges consistent with its dual mandate. The Committee continues to see the risks to the outlook for economic activity and the labor market as nearly balanced. but is monitoring developments abroad. Inflation is anticipated to remain near its recent low level in the near term, but the Committee expects inflation to rise gradually toward 2 percent over the medium term as the labor market improves further and the transitory effects of earlier declines in energy and import prices dissipate. The Committee continues to monitor inflation developments closely.

The world of economisseds was evenly split...

 

But ahead of the meeting, bond yields started to rip lower...

 

*  *  *

Since the last FOMC Statement (at the end of July) and FOMC Minutes (8/19), equities and bonds have underperformed...

 

Hike! - 42-year low jobless claims...

 

Don't Hike! - Inflation expectations testing post-crisis lows...

 

Not "Priced In"

Charts: Bloomberg

 

*  *  *

 

Full Redline Statement below:

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Looney's picture

Yellen should be dressed as a Leprechaun.

The FOMC decision will contain:

468 "You'll never get me lucky charms”.

61 “Donald Trump”.

2 “Mazel Tov”.

1 “Allah Akbar”, at the end.  ;-)

Looney

Plunge Protection's picture

What a joke... QE infinity ZIRP to eternity

Endgamer's picture

When this bubble bursts, it will be quite spectacular.

kliguy38's picture

All eyes now on the dot-plots as The Fed desperately tries to regain some credibility, stifle uncertainty, and calmly reassure markets that "we've got your back."   AND YOUR BUTT

NoDebt's picture

Janet Yellen- "We'll raise them rates next time, just you watch and see!"

John Boehner- "We'll stop them Democrats next time, just you watch and see!"

I detect a pattern.  A vague connection somehow.

coinhead's picture
coinhead (not verified) NoDebt Sep 17, 2015 2:17 PM

WOW!  Big F'n surprise Janet!!

SWRichmond's picture

even bigger surprise was the 9-1 vote.

Antifaschistische's picture

The game.....is acting as if they are actually considering a rate increase.   They have no intentions of ever raising rates....eventually, they do understand that some SHTF event will force them into it, then they can hide behind that event.  Otherwise, they will never man up.

Meat Hammer's picture

Rates are never going up because this baby is headed to full meltdown.  There will be no "rates" involved with whatever rises from the ashes.

Poundsand's picture

I would love to feel good about your Janet Yellen comment and say, "I told you so!" and pat myself on the back.  But then you added the Boehner stuff and it all went out the window because you are so right.

Thanks, thanks a lot for ruining my day.

 

mademesmile's picture

I think black helicopters are going to take on a whole diffrent meaning :-)

cash drops would bea real nice QE.

MANvsMACHINE's picture

The jawbone effect is wearing mighty thin.  They will never raise unless they are aiming for a controlled demolition although they won't really have much control at that point.

Never One Roach's picture

I think the tradition of circumcision left her scarred for life.

MalteseFalcon's picture

China will force the bad consequences the FED is desperately trying to avoid.

Latina Lover's picture

Yeah, time for another war in the Middle East, to boost the economy.  

Singing to the Clash:

We really don't like them,

Let's rocket the casbah!

Let's rocket the casbah!

 

Dick Gazinia's picture

Not the Mid East!  Those fuckers are too tough for our PC transgender army.  Lets take on Canada.  

Latina Lover's picture

Who tha fuck would want dem fag eating Canadians? Could you imagine another 33 million left liberal, gun stealing, humanitarian bomber types polluting the Amerikan political spectrum, clamoring for welfare and demanding that the pronouns 'he' and 'she' be PC'ed to Ze and Zir?

 

https://genderneutralpronoun.wordpress.com/tag/ze-and-zir/

Beam Me Up Scotty's picture

LOL, look at the DOW yo-yo back and forth as the herd tries to figure out whether the market should go up or down.

TeamDepends's picture

How long will the vertical line in PMs last. A harbinger....

NoDebt's picture

How did rates know to drop a few minutes BEFORE the Fed announced their decision?  Oh.  Oh, yeah.

Jlasoon's picture

Wall Street ain't rich enough!!!!!

mtndds's picture

This just proves to me that things are really shitty out there in the world economy.  All this bullshit data that says things are good is just that, BULLSHIT!!  The truth was shown today.  Prepare for shitty times my friends.

Never One Roach's picture

You're nuts! O'bamanomics has neve rbeen robuster!

 

Layoffs to begin this fall at Home Depot center in Hagerstown

 

"... more than 300 jobs there ..."

 

http://www.heraldmailmedia.com/news/local/layoffs-to-begin-this-fall-at-...

 

Good for a 1% drop in the jobless rate using their BLS equations.

SDShack's picture

I've said for years.... "Hope & Change" was nothing but "Hoax & Chains". Everyday it's proven true.... over and over and over....

Plunge Protection's picture

yea rates plunge right into the announcement and stay practically static; pricing in the entire move... hmmmmm

JOHNLGALT's picture
JOHNLGALT (not verified) Plunge Protection Sep 17, 2015 9:53 PM

Just a suggestion on your moniker. Do you think CONDOMS would be more appropriate?  _JOHNLGALT

sdmjake's picture

Same way that someone bought almost 2,000,000 shares of the 300% leveraged Gold Miners 2 minutes before the announcement...its a big club and you ain't in it!

sunaJ's picture

No white smoke, no change, and no new pope, just the same acrid black smoke blowing up all our arses.

The white smoke will announce QE4.1 soon enough, but not before they shake the market tree first.

 

cynicalskeptic's picture

Never underestimate the bubble blowing abilities of TPTB.

Amazing how far they can keep kicking that poor old dented can........   it defies all natural laws  

Mountainview's picture

Market distortion ad infinitum. Government gets money for free. Private business ventures have to pay hefty premiums to banks. This leads to more governments and industrial activity developing abroad! Bright future!

nope-1004's picture

I guess Socrates was wrong Marty.  Now what? 

moneybots's picture

"I guess Socrates was wrong Marty."

 

Armstrong didn't say the FED would raise the rate today.  He just thinks they will by the end of the year.  There are a few more meetings to go till 2016.

FreeMoney's picture

Geez....I'm soooo surprised.  

The FED is backed so far into a corner they can not increase the interest rate or unwind their balance sheet without destroying the world economy....or maybe their masters at giant squid havent squeezed enough blood from the stone yet.

This will only make the bubble bursting bigger. 

NoDebt's picture

We own $2T of USTs from all the QE we did.  

Hey, don't bonds go down in value if interest rates rise?

Uh oh.  Better not raise them rates.

TeamDepends's picture

Feeling QuEasy, just ZIRPed all over.

pods's picture

No worries, they are immediately starting up rumors of them raising rates (for real this time) at the next meeting.

Even old 911 Larry had enough balls to pull it.  

Can't wait till the next "most important FED meeting" to start being prepared for.

pods

NoDebt's picture

Oh, they'll get 'em next time, pods.  For sure.  Just you wait and see!

I can't want to see how they justify their NEXT failure to launch when the global downturn has 3 more months under it's belt and the data is looking decidedly grim.  Then wait for the slow walking-back of any rate increases and more talk about "further easing".

I've never seen the Fed be SO late that they're actually early for the next cycle.  

pods's picture

"We figured that since we are going to have to cut them next meeting that we'd leave then alone this time."

pods

Sir Edge's picture

We Need Moar Israeli Art Students...

SHEEPFUKKER's picture

Everything is so awesome, but just not awesome enough.  

Al Capowned's picture

"You cant taper a ponzi scheme"  - Mitch Feierstein

FireBrander's picture

Figures...Wall Street First, Main Street last...but what else should we expect...the FED is Wall Streets Momma...

Bloppy's picture

Why did anyone think they would raise rates?

It's Lucy with the football.

 

 

 

Fiorina's delivery was impressive:

 

http://tinyurl.com/nqjcad2


FireBrander's picture

"Why did anyone think they would raise rates?"

Exactly, how would raising rates benefit the banking system?

I can't answer that question.

~~~~~~~~~~

How would raising rates damage the banking system?

Oh, let me count the ways!!!

1. Higher mortgage rates, less loan origination fees!

2. Surge, but then collapse in refinance revenue!

3. Adjustables go up on people barely making ends meet now..late payments increase, as well as defaults.

4. The US Gov may run into trouble with continued further expansion of the welfare state...Medicare, Social Security and all the rest of the welfare programs won't grow or may be cut back...yikes!...how will we pay for all that Chinese shit?

I bet this list could reach a 100 if you all contributed...again, any wonder they didn't raise rates...and yes Dorthy, they CAN NEVER RAISE RATES...the market will force it somehow, and no one will have seen it coming and they will be powerless to stop it.

vincent's picture

I was wrong. Expected the .25 ( one and only) and a metals smash.

As it turns out Fed feared shitshow globally with an increase. There will never be a good time.

Metals got a pop, and now I'll look for the coming beat down.

Now, back to our regular programming.....

GLTA

 

OldPhart's picture

So savers and pensioners continue to get shafted.

We effectively earn negative interest on our money due to inflation.  And I'll be damned if I'll ever put a dime into the ongoing Wall Street casino.