FOMC Minutes Show Fed Rate Hike Decision Was "A Close Call", Feared Market Reaction

Tyler Durden's picture




 

Since The December 16th FOMC decision to hike rates, Gold is up over 2%, Bonds up 1%, and stocks down 3% suggesting the word "error" with regard Fed policy. As The FOMC Minutes are released, traders anticipate confident-hawkishness and a focus on ignoring current data in favor of preferring their own confident outlook:

  • *ALMOST ALL FED OFFICIALS AGREED LIFTOFF CONDITIONS MET IN DEC.
  • *FED: LINGERING RISKS TO OUTLOOK INCLUDED FURTHER USD STRENGTH
  • *A FEW FED OFFICIALS SAID FINANCIAL RISKS COULD ALTER RATE PATH

January's meeting has negligible probabilities for a rate move but March has 45% chance of a hike and 3% chance of a cut. The apparent unanimity of December's decision appears questionable given the Minutes suggestions of some dissent.

Pre-FOMC Minutes: S&P Futs 1983.25, 10Y 2.19%, Gold $1094, EUR 1.0755, WTI $34.05

Policy "error" or not?

 

*  *  *

Further headlines:

  • *SOME FOMC MEMBERS SAW DECEMBER RATE RISE AS `CLOSE CALL'
  • *RISKS TO INFLATION INCLUDED OIL, STRONGER DOLLAR: FED
  • *COUPLE MEMBERS WORRY GLOBAL DISINFLATION MAY OFFSET JOB GAINS
  • *SOME FOMC MEMBERS STRESSED NEED TO SEE INFLATION RISING
  • *SOME FOMC MEMBERS SAW `CONSIDERABLE' RISK TO INFLATION OUTLOOK

The key section showing that the rate hike was a "close call":

If the Committee waited to begin removing accommodation until it was closer to achieving its dual-mandate objectives, it might need to tighten policy abruptly, which could risk disrupting economic activity. Members observed that after this initial increase in the federal funds rate, the stance of monetary policy would remain accommodative. However, some members said that their decision to raise the target range was a close call, particularly given the uncertainty about inflation dynamics, and emphasized the need to monitor the progress of inflation closely.

On the future path:

Even after the initial increase in the target range, the stance of policy would remain accommodative. Participants saw several reasons why a gradual removal of policy accommodation would likely be appropriate.

When does the Fed stop hiking? When "financial stability" risk emerges:

Several participants discussed potential interactions between policy normalization and risks to financial stability... few participants also indicated that significant risks to financial stability, should they emerge, could alter their view of the appropriate policy path.

The Fed on market expectatitons:

Quotes in financial markets and survey results suggested that investors were quite confident that the Committee would raise the federal funds target range 25 basis points at the current meeting.

On correcting asset prices, aka energy junk bonds:

In their discussion, several participants commented that markets for leveraged finance had been correcting since midyear—particularly for the most risky assets, including those associated with energy firms—and noted that the widening of credit spreads in corporate bond markets appeared to be largely due to the repricing of riskier assets

The Fed on liquidating and gating mutual funds:

Concerns among investors about the high-yield bond market increased notably in the days before the meeting after an openended mutual fund specializing in junk bonds suspended redemptions and closed.

FOMC Minutes.

5
Your rating: None Average: 5 (2 votes)
 

- advertisements -

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
Wed, 01/06/2016 - 14:03 | 7005840 Soul Glow
Soul Glow's picture

What rate hike?

Wed, 01/06/2016 - 14:07 | 7005860 highandwired
highandwired's picture

What does Richard Fisher know?  Does he know that the collapse is going to happen soon?  I ask this because of his disclosure that the Central Banks "frontloaded" the market and basically "juiced" it.  What does he mean by "digestive period"?  https://www.youtube.com/watch?v=pnIYZiWlaUY

Wed, 01/06/2016 - 14:10 | 7005874 Looney
Looney's picture

At the next meeting, the Fed will be forced to replace its Dot Plot with the Brown Smudge Chart.

Looney  ;-)

Wed, 01/06/2016 - 14:27 | 7005921 nope-1004
nope-1004's picture

When you "release" the minutes of your meeting a month after the market reaction, you can never be wrong.  People, clue in.  Would you like me to release the minutes today of my Dec 10 meeting about the weather for Christmas Day?  FFS.... this is a total joke.

When is the world going to wake up and realize we are all totally being played by the banks?  Releasing the minutes a month after doing something is a fuckan JOKE.  They should be required to release the minutes of the meetings (I believe there actually is no meeting) at the same time, or STFU.  This is a legitmacy play on the people to show you that they had the foresight at the meeting to predict proper market reaction.

This comedy script of "oh wow, was a close call" is pure BS.  People, you are all being strung along.  These minutes were created and massaged over the last week or so.  THey are lying.

END the FARCE by ending the FED.

 

 

Wed, 01/06/2016 - 14:15 | 7005881 Bastiat
Bastiat's picture

"Digestive period" means bloating and cramps followed by projectile vomiting and explosive diarrhea.

Cure?  More QE:  It's got electrolytes!

Wed, 01/06/2016 - 14:08 | 7005870 Hitlery_4_Dictator
Hitlery_4_Dictator's picture

ANOTHER FED FAIL. ANOTHER FED FAIL. ANOTHER FED FAIL. ANOTHER FED FAIL. ANOTHER FED FAIL. ANOTHER FED FAIL. ANOTHER FED FAIL. ANOTHER FED FAIL. ANOTHER FED FAIL. ANOTHER FED FAIL. ANOTHER FED FAIL. ANOTHER FED FAIL. ANOTHER FED FAIL. ANOTHER FED FAIL. ANOTHER FED FAIL. ANOTHER FED FAIL. ANOTHER FED FAIL. ANOTHER FED FAIL. ANOTHER FED FAIL. ANOTHER FED FAIL. ANOTHER FED FAIL. ANOTHER FED FAIL. ANOTHER FED FAIL. ANOTHER FED FAIL. ANOTHER FED FAIL. ANOTHER FED FAIL. ANOTHER FED FAIL. ANOTHER FED FAIL. ANOTHER FED FAIL. ANOTHER FED FAIL. ANOTHER FED FAIL. ANOTHER FED FAIL. ANOTHER FED FAIL. ANOTHER FED FAIL. ANOTHER FED FAIL. ANOTHER FED FAIL. ANOTHER FED FAIL. ANOTHER FED FAIL. ANOTHER FED FAIL. ANOTHER FED FAIL. ANOTHER FED FAIL. ANOTHER FED FAIL. ANOTHER FED FAIL. ANOTHER FED FAIL. ANOTHER FED FAIL. ANOTHER FED FAIL. ANOTHER FED FAIL. ANOTHER FED FAIL. ANOTHER FED FAIL. ANOTHER FED FAIL. ANOTHER FED FAIL. ANOTHER FED FAIL. ANOTHER FED FAIL. ANOTHER FED FAIL. ANOTHER FED FAIL. ANOTHER FED FAIL. ANOTHER FED FAIL. ANOTHER FED FAIL. ANOTHER FED FAIL. ANOTHER FED FAIL. ANOTHER FED FAIL. ANOTHER FED FAIL. ANOTHER FED FAIL. ANOTHER FED FAIL. ANOTHER FED FAIL. ANOTHER FED FAIL. ANOTHER FED FAIL. ANOTHER FED FAIL. ANOTHER FED FAIL. ANOTHER FED FAIL. ANOTHER FED FAIL. ANOTHER FED FAIL. ANOTHER FED FAIL. ANOTHER FED FAIL. ANOTHER FED FAIL. ANOTHER FED FAIL. ANOTHER FED FAIL. ANOTHER FED FAIL. ANOTHER FED FAIL. ANOTHER FED FAIL. ANOTHER FED FAIL. ANOTHER FED FAIL. ANOTHER FED FAIL. ANOTHER FED FAIL. ANOTHER FED FAIL. ANOTHER FED FAIL. ANOTHER FED FAIL. ANOTHER FED FAIL. ANOTHER FED FAIL. ANOTHER FED FAIL. ANOTHER FED FAIL. ANOTHER FED FAIL. ANOTHER FED FAIL. ANOTHER FED FAIL. ANOTHER FED FAIL. ANOTHER FED FAIL. ANOTHER FED FAIL. ANOTHER FED FAIL. ANOTHER FED FAIL. ANOTHER FED FAIL. ANOTHER FED FAIL. ANOTHER FED FAIL.

Wed, 01/06/2016 - 14:11 | 7005879 Dr. Engali
Dr. Engali's picture

You are under the false assumption that the fed heads are looking out for the interest of the U.S people. When you consider that their job as a private entity is to transfer wealth upwards into the hands of a few you will realize that their policies have been a resounding success.   

Wed, 01/06/2016 - 14:15 | 7005906 Hitlery_4_Dictator
Hitlery_4_Dictator's picture

Trust me I am under no flase assumptions about that. Still have to get people to relaize the FED has failed. 

Wed, 01/06/2016 - 15:43 | 7006418 herkomilchen
herkomilchen's picture

ZQF6 disagrees with you.

Wed, 01/06/2016 - 14:24 | 7005952 symboliclogic
symboliclogic's picture

When you try your best, but you don't succeed
When you get what you want, but not what you need
When you feel so tired, but you can't sleep
Stuck in reverse.

When you try your best, but you don't succeed
When you get what you want, but not what you need
When you feel so tired, but you can't sleep
Stuck in reverse.

When you try your best, but you don't succeed
When you get what you want, but not what you need
When you feel so tired, but you can't sleep
Stuck in reverse.

When you try your best, but you don't succeed
When you get what you want, but not what you need
When you feel so tired, but you can't sleep
Stuck in reverse.

When you try your best, but you don't succeed
When you get what you want, but not what you need
When you feel so tired, but you can't sleep
Stuck in reverse.

Wed, 01/06/2016 - 14:09 | 7005873 Lady Jessica
Lady Jessica's picture

It was a head fake hike.

Wed, 01/06/2016 - 14:07 | 7005861 KnuckleDragger-X
KnuckleDragger-X's picture

Free Vaselinre for everybody, cause we're gonna need it.......

Wed, 01/06/2016 - 14:12 | 7005880 4 wheel drift
4 wheel drift's picture

bunch of lying hypocrites.....

 

oh wait....  they are all eko-no-mists...

and sold out shils

Wed, 01/06/2016 - 14:12 | 7005882 yogibear
yogibear's picture

Now, it's not about the Federal Reserve doing the right thing, it's about blowing asset bubbles and making a few people richer.

The Fed's reckless behavior will and is showing up on main street. 

More QE (QE4, QE5) to keep bubbles extended further and keeping the financial criminals going is the Fed's methodology.

Next on the agenda is for the Fed and the banksters to start raiding savings and 401K accounts to keep their lavish lifestyle going.

There should be protests in the streets but it's not happening. Until that happens the fed and the banksters will continue their stealing.

 

Wed, 01/06/2016 - 14:28 | 7005964 carbonmutant
carbonmutant's picture

Here's the problem from the guy sitting in Janet's old chair at the FED, Stanley Fischer:

"The Fed can't be led by what markets think"

He said this morning that they're pushing for 4 hikes this year.

 

Wed, 01/06/2016 - 14:28 | 7005971 Slowdrip
Slowdrip's picture

Full steam ahead, fck that iceberg....

Wed, 01/06/2016 - 14:51 | 7006084 RawPawg
RawPawg's picture

what page is it that mentions the part about shutting down ZH for 45 minutes?

Wed, 01/06/2016 - 15:07 | 7006163 marts321
marts321's picture

Hm let's see, pretty much every major market is pointing to risk aversion/contraction, and has been for some time, then these sociopaths come along and tighten into it? Talk about a one way bet... 

Wed, 01/06/2016 - 16:06 | 7006536 surf@jm
surf@jm's picture

FED money printing will not help overspending bankrupt governments.....

And if they try to helicopter in to those governments, bye bye dollar........

Wed, 01/06/2016 - 16:21 | 7006632 Secret Weapon
Secret Weapon's picture

"SOME FOMC MEMBERS STRESSED NEED TO SEE INFLATION RISING"

They would see inflation just fine if they stopped using shitty data. 

 

http://www.shadowstats.com/alternate_data/inflation-charts


Do NOT follow this link or you will be banned from the site!