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Fed Hikes Rates, Unleashing First Tightening Cycle In Over 11 Years
On the 7th anniversary of entering ZIRP, and for the first time since June 29th 2006, The Federal Reserve announced today that it will try and raise interest rates:
*FED RAISES INTEREST RATES 0.25 POINT IN UNANIMOUS VOTE
Of course, the flowery language and dots are as dovish as possible while maintaining some semblance of credibility with regard growth expectations as The Fed unleashes a tightening cycle for the first time in over 11 years.
Pre-FOMC: S&P Futs 2050, 2Y 98bps, 10Y 2.29%, Gold $1072, Oil $36, EURUSD 1.0960
Wow - 10-year Treasury liquidity - lowest I've EVER seen it.. back to 2008 at least
— Eric Scott Hunsader (@nanexllc) December 16, 2015
Heading into the decision, gold and silver suddenly started to fade, bond yields slid notably, and the USD jerked lower.
What's happened since The Fed folded in September? Macro "data" got worse... Market "data" got better...
The Fed has never raised rates in December when stocks were down over the last 6 months...
h/t @RyanDetrick
And when it has raised rates in December, stocks have pushed lower.
The Fed is raising rates today with the VIX above 20 for the first time since 2000...
That did not end well...
The Fed is also raising rates with Junk bonds trading worse that after Lehman...
* * *
In the end, the Fed did not surprise, and raised interest rates for the first time in almost a decade in a widely telegraphed move while signaling that the pace of subsequent increases will be “gradual” and in line with previous projections. The Federal Open Market Committee unanimously voted to set the new target range for the federal funds rate at 0.25 percent to 0.5 percent, up from zero to 0.25 percent. Policy makers separately forecast an appropriate rate of 1.375 percent at the end of 2016, the same as September, implying four quarter-point increases in the target range next year, based on the median number from 17 officials.
“The committee judges that there has been considerable improvement in labor market conditions this year, and it is reasonably confident that inflation will rise, over the medium term, to its 2 percent objective,” the FOMC said in a statement Wednesday following a two-day meeting in Washington. The Fed said it raised rates “given the economic outlook, and recognizing the time it takes for policy actions to affect future economic outcomes.”
The increase draws to a close an unprecedented period of record-low rates that were part of extraordinary and controversial Fed policies designed to stimulate the U.S. economy in the wake of the most devastating financial crisis since the Great Depression. The FOMC lowered its benchmark rate to near zero in December 2008, three months after the collapse of investment bank Lehman Brothers Holdings Inc. and 10 months before unemployment in the U.S. peaked at 10 percent.
* * *
Full Redline below:
The number of words per statement:
There was much expectation that the Fed's announcement would be a Dovish hike based on a reduction in the 2016 median dot, however the Fed did not do that, and instead while the Kocherlakota negative dot was removed, the FOMC kept the median 2016 fed funds rate at 1.4% for year end, suggesting 4 rate hikes during 2016 and that the market is underestimating the pace of rate increases.
Where there was some dovishness was in the 2017 year end median FF, which was reduced from 2.6% to 2.4%. This can be seen in the compared dot plots.
Additionally, what is perhaps even more surprising is that while the Fed did boost its 2016 year end GDP forecast, it cut the median core PCE forecast from 1.7% to 1.6%, suggesting that the deflationary forces continue to prevail aside from the "transitory" impact of oil.
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Purple means hike, its code to her tribe.
https://www.youtube.com/watch?v=AHh6N0dMKtU
Let's see actual inflation from what I can gather from supper market prices is about 4% so an increase of 0.25 means uh what!?
I''m guessing that the FED is hoping that overseas muppets will send money to put into the US banks.
Historically it takes three days of missed meals before the riots hit.
This is not about inflation. This is about bank solvency. Local muppets, foreign muppets, slaves are all the same.
ok ok ok so the earth didnt crack in half today....
but all the notes indiacte that all this decision making is effective 12/17....so maybe tomorrow?
Ok. It's now tomorrow. Aaaaaaand nothing.
Today only proves the Fake Wall Street Recovery was real!
Congratulations, ZH. You got served your first writ for libel, as it was called in the old days when establishment forces wanted to gag journalists who were on target. It's called something else nowadays. Consider it a badge of courage. Well done. Write on.
Four major U.S. banks have now raised interest rates for variable rate mortgages, effective next month. But there is no relief for savers, makers. The next stage of the biggest heist in history begins.
The ballyhoo over this tiny 0.25 has yet to survive one night, let alone a week. Eyes on the Asia markes tonight, and Friday.
Janet has put in the banksters' excuses. Hissy of the WSJ did too. Golly, gosh gee whiz, anything can happen ;-) Who'd a know'd it. Tells me everything I don't want to know about Fischer, Bernanke and Greenspan that they would sneak off, and leave Grandma to make excuses for their mistakes, and grandiose plots for insolvent banks, and City of London globalists, manipulating and abusing the mensch.
V is for VERACITY.
Fuck 'em if there is nothing for Savers!
Release the Kraken!
All to do about nothing!...Bet, CRIMINALS, can't resurrect, my "american dream".
So...carry on, hopeful.
It takes time for this to start having an effect sometime in 2016 it will hit and if it doesn't then we were all wrong and pigs do fly.
I'm watching pigs wings flapping right now.
“The committee judges that there has been considerable improvement in labor market conditions this year, and it is reasonably confident that inflation will rise, over the medium term, to its 2 percent objective,” the FOMC said in a statement Wednesday following a two-day meeting in Washington.
The GOSPLAN has spoken. All rise!...
https://www.youtube.com/watch?v=x72w_69yS1A
Unbreakable Union of freeborn Republics
Great Russia has welded forever to stand!
Created in struggle by will of the Peoples,
United and Mighty our Soviet Land!
CHORUS
Sing to our Motherland, Free and Undying,
Bulwark of Peoples in Brotherhood Strong
Flag of the Soviets, Flag of the people,
From Victory to Victory lead us on!
Through tempests the shadows of freedom have cheered us,
Along the new path where great Lenin did lead,
Be true to the people, thus Stalin has reared us,
Inspired us to labor and Valorus Deed.
CHORUS
Sing to our Motherland, Free and Undying,
Bulwark of Peoples in Happiness Strong!
Flag of the Soviets, Flag of the People,
From Victory to Victory lead us on!
Our army grew up in the heat of grim battle,
Barbarian invaders we'll swiftly strike down.
In combat the fate of the future we'll settle,
Our country we'll lead to eternal renown!
CHORUS
Sing to our Motherland, Free and Undying,
Bulwark of Peoples in Bravery Strong!
Flag of the Soviets, Flag of the people,
From Victory to Victory lead us on!
Raise rates or be FIRED. I guess we'll raise.
How much is .25% of 19 trillion? HMMM.. Life is going to get quite expensiver
http://danielamerman.com/va/Conflict.html
"Given its sheer size, if the interest rate on that debt were to rise by even 1%, the annual federal deficit rises by $180 billion. A 2% increase in interest rate levels would up the federal deficit by $360 billion, and if rates were 5% higher, the annual federal deficit rises by $900 billion."
"5% increase in interest payments for the federal government would cause the level of federal debt to rise to $85 trillion over the next 20 years because of the compounding of interest, and a 10% increase in interest rates would cause the federal debt to climb to over $200 trillion."
http://danielamerman.com/va/Compound.html
When you've got the market under algo control, you can do what a free market would otherwise punish you for.
Ass up.
Brilliant, the sooner it goes up the sooner NIRP turns up, because NOBODY could have seen it coming, the entire world has massively over produced in everything
Why was there so much angst in August over a possible FED raise, that the market nosedived, but this time it yawned and rallyed?....
Market maker manipulation?.....
Big Spike then Big Dump
Everyone knows
Yayyyy ! Were they all uncontrollably masturbating, on CNBC, at the news ?
Poor , financial journalistic " experts " . Who have fuck all idea , of what drives the markets.
Fucking, CLOWN SHOES !
I was wrong.
When I said the Americans would not raise their interest rates, I was totally wrong. Now it's certain the Americans believe their own lies. How the Fed could have done this otherwise, and thence remove the possibility of all plausible denial to responsibilty for the economic and financial calamity to ensue?
The Americans are completely mad.
And there's nothing to save us from them.
Except ourselves.
America=ISIS
maestro, the washington DC gov is now going on a spending spree to off set the fed stance..our debt cap was removed, as in there is none..
massive gov spending to help main street is what our masters have come up with..corruption is in a bull market.
Duly noted, overmedicated. We have no choice but to watch this as it unfolds. I'm glad I'm not a young person anymore.
this month:1. debt cap for fed budget removed
2. 2 trillion spending bill to be passed
3. now Fed rate hike..
4. calls for war in syria and with russia?
", late Tuesday night, Ryan unveiled a few thousand pages of consequential tax, spending, and regulatory legislation costing roughly $2 trillion and gave Congress and the public two whole days to review everything."
the fed was calling for fiscal restrait..all I can say WTF.
Debt does not matter.