With no press conference, expectations were muted going in (aside from the ubiquitous VIX-dip, equity market rip that happens at every FOMC meeting) but seemed to hint at delaying a September/December liftoff is on the cards - needing more job improvement...
- *FED SAYS LABOR MARKET CONTINUED TO IMPROVE, JOB GAINS `SOLID'
- *FED REPEATS RISKS TO ECONOMY, JOB OUTLOOKS `NEARLY BALANCED'
- *FED: RATE TO RISE AFTER `SOME FURTHER' JOB MARKET IMPROVEMENT
And so the confusion continues... [4] the jobs market is telling the Fed one thing, while inflation (held down by a lackluster Chinese demand which has in turn exacerbated a global deflationary supply glut) is saying something different, and remember 25bps doesn't matter (just like subprime was "contained"). Full redline below.
Pre-Fed: S&P Futs 2096.00, 10Y 2.2880%, Gold $1095, EURUSD 1.1050, VIX 12.92
As usual VIX was crushed:
[5]
But broadly, bonds have led and stocks lagged since the June Fed meeting...
[6]
But a data dependent Fed may have a problem convicing the world that they are hiking rates for anything but total horror at the asset bubbles they have blown... because macro data has faded again...
[7]
* * *
Further headlines...
- *FOMC VOTE WAS UNANIMOUS
- *FED SAYS LABOR SLACK `HAS DIMINISHED' SINCE EARLY THIS YEAR
- *FED REPEATS ECONOMY `EXPANDING MODERATELY' IN RECENT MONTHS
- *FED REPEATS IT WANTS TO BE `REASONABLY CONFIDENT' ON INFLATION
- *FED SAYS BUSINESS INVESTMENT, NET EXPORTS STAYED SOFT
- *FED REPEATS MKT-BASED INFLATION COMPENSATION GAUGES REMAIN LOW
This is the 54th straight Fed meeting with no rate hike. We now await Jon Hilsenrath (absent a press conference) to explain what The Fed means.
* * *
The Key Statement:
it will be appropriate to raise the target range for the federal funds rate when it has seen some further improvement in the labor market
Which implies a delay or more dovish stance even though it contrasts with the addition of the word "solid" when describing the labor market:
The labor market continued to improve, with solid job gains and declining unemployment.
The last notable change: "energy prices appear to have stabilized" was removed from the June statement, and for good reason.
Full blueline below.
[8]
And perhaps more intteresting, the FOMC word count has largely normalized, and at 539, is down to levels not seen since August 2012:
[9]
* * *
And finally (h/t @RudyHavenstein) - this sing seems to be wasted now...
Charts: Bloomberg