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Market Confidence In The Fed's Policy Error (Summed Up In 1 Chart)
While The Fed is confidently rising rates, the market is signalling its belief that this is a policy error. Not only are longer-dated bond yields lower but short-term money-market expectations for January now see a higher chance of a rate-cut, than a rate-hike.
"If they do hike, watch the long-end," was the warning in September for clues to a possible policy error by The Fed. As BofAML previously warned,
If the Fed does raise rates, however, that doesn’t mean the “all clear” signal will have been sounded.
To the extent investors view the hike as a policy error, a flight to quality is likely to follow with the Treasury curve bear-flattening and risk assets selling off. Even if investors don’t overtly seem to believe a rate hike is a policy error, it appears that many investors believe a rate hike will be accompanied by extremely dovish language, possibly to offset the sting of the rate hike.
As such, it is likely that the accompanying language will be dissected syllable by syllable as investors and economists try to quantify whether or not it is dovish enough. The problem with this as we see it, however, is that this line of reasoning appears to be so widely accepted that we worry about how investors will react if the actual accompanying language is interpreted as “not dovish enough.”
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"We have to raise the rates so we can cut them"
Yes. A Pelosi-ism.
Can't wait! (Bart Scott voice)
That's why I come here. ZH is always the cutting edge. The folks at Saudi Arabia & ISIS always get a head with the cutting edge.
Yup, they beheading to the forefront of blade technology. We beheaded to the forefront in full metal jacket technology a long time ago. We win.
Nine out of ten jihadists prefer the Head Master 2000. It slices and dices. It makes julian fries!
Yeah, I hear Mr. Assange is particulary nervous about that one.
Will an 1/4% increase matter? Only to the extent it affects USDJPY. The yen carry trade -- and, to some extent oil prices -- are still ALL THAT MATTER.
Yellen "don't need to see oil prices rebound" translates into we'll keep oil prices low so we can sell the BoJ on further declines in the yen and rationalize continued dovish monetary stance.
http://pebblewriter.com/just-another-day/
Well, they raised rates and the world did not end. Now what?
They did not raise rates. They said they were going to raise rates. Once Monetary base starts to shrink (attempting to raise rates), check back and see if the world had ended.
So, Tyler ...
Why the site outage of close to an hour ???
A Fight Club inspired prank no doubt. They wanted us to think the world really did end LOL!
There are three possibilities: rate hike, rate cut, and no movement. You show two. The vast bulk of the distribution (call it 80%) lies within the "no movement" category. So...yeah... Trying to divine out the market's confidence (or lack thereof) from this incomplete chart is such shitty analysis it's prompted me to write three edits now to an already snarky response.
You want to know why nobody takes you seriously? This is why nobody take you seriously.
Take your normal distribution Fed models and kick rocks
Three pillars of sand our economic system is built on:
1.Federal Reserve Bank
2.Fiat Currency
3.Fractional Reserve Banking
The Federal Reserve tries to regulate the economy. Their two mandates are current and expected inflation and unemployment.
The Federal Reserve creates money and or makes money inexpensive by manipulating interest rates lower. Rarely manipulating rates higher. This is inflation. Prices go up and real wages go down.
The Federal Reserve creates bubbles and crashes by pushing interest rates too low or too high for too short or too long of time.
Who regulates the regulators at the Federal Reserve to keep the people safe from it and its mistakes? The only real regulator possible is the free market.
With the Federal Reserve in place the market becomes the judge of the Federal Reserve decisions, rather than the regulator.
The Federal Reserve in essence aids debtors and punishes savers. A depreciating dollar aids debtors and harms savers. An appreciating dollar aids savers and harms debtors.
If you start giving an economy fish (easing Federal Reserve monetary policy, excessive federal government spending; deficit, national debt), the economy starts fishing less and starts dining more. Temporary misallocated (Keynesian stimulated) employment increases and sustainable production employment decreases.
Abolish the Federal Reserve, the FDIC and all bank regulations except one; require full disclosure on full or fractional reserve backing of deposits. Treat gold, silver and cryptocurrencies as legal tender (not as an asset) for tax purposes.
If you are concerned about the growing income inequality gap, if you are against war, against the military–industrial complex, against mega-mergers of companies and against invisible taxation, then you are against the Federal Reserve.
We need to read the caugh* caugh* results of the seasonally adjusted results, of the 25 basis point adjustment, in order to adjust.
I got it...
I'm extremely concerned with the fact that one of the 'finest informative financial' sites on" Planet Earth" was disrupted for the duration of a supposed " Free Market" policy change.?
It was both dovish and dumb; oopps they did not say dumb. Note; Janet was sitting today; makes it so the wet farts do not run down the legs.
you are bad but I gave you an arrow up nonetheless..............at least she didn't pause for 3 minutes over her glass of water like last time......