Hilsenrath Front-Runs Fed: Hints "Considerable Time" Language Will Remain

The last week has been dominated by sell-side strategists raising hawkish concerns about this week's FOMC with a focus on the drop of the "considerable time" language describing the period from the end of QE to the start of rate hikes. The Wall Street Journal's Fed-whisperer Jon Hilsenrath just dropped a rather large hint that that the "considerable period" language will remain... and bonds are rallying.



Via The Wall Street Journal discussion...

"The headline, when we read the statement tomorrow, the words "considerable time" are still going to be there."

However, Hilsenrath adds,

"but I think the comments will be qualified in the Yellen press conference that follows."

The question is how.

Given the economic backdrop, they don’t want to send a signal right now that rate increases are imminent,” Hilsenrath said. “I think what they do, at the end of the day, is they qualify it.”


But the Fed is also focusing on its bond-program exit strategy, which is likely a main focus at its meeting Tuesday and Wednesday.


One of the headlines they’re going to come out with I expect to be formalizing some of their exit plan,” Hilsenrath said. “It becomes, in their mind, a lot for the market to digest if they announce their exit strategy and change their guidance at the same time.


“It’s why I think, on the guidance front, they qualify and leave the hard decisions off for another day.”

* * *

The market reacted exuberantly - along with China's QE headlines. However, not everyone agrees despite Hilsenrath's fed-whisperyness...

Fed expected to adopt more hawkish stance at Sept. 16-17 meeting, debate whether to drop “considerable time” language from statement, based on published research.


  • Fed expected to take “modestly hawkish” tone at meeting, Barclays strategists led by Rajiv Setia wrote in report
  • “Dovish dots” seen moving higher, press conference will have “subtle shifts” in tone
  • Fed likely to retain “considerable time” language; if dropped, “front end should get hurt” and “10/30 curve should still flatten”


  • First rate increase now seen as occurring next June vs. Sept. 2015, economist Ethan Harris wrote in note
  • Growth has been stronger than expected, while inflation is in line with Fed’s forecast
  • Fed could drop reference to “considerable time”


  • Fed statement to be “somewhat more hawkish” than in past, economists Ward McCarthy, Thomas Simons wrote in note
  • FOMC meeting will fail to clarify ambiguity over timing of rate lift-off


  • First rate increase is now expected next June vs 3Q 2015, economist Michael Feroli wrote in note
  • Sees 25bps increase in Fed funds corridor to 25bps-50bps; subsequent moves in Sept. and Dec., bringing corridor to 75bps-100bps by end of 2015

Market Securities

  • Fed to modify “considerable time,” cut QE by another $10b, strategist Christophe Barraud wrote in note

Morgan Stanley

  • Fed’s 2017 dots may prompt curve shifts, strategists led by Matthew Hornbach wrote in note
  • “Stage is set for some disappointment” if Fed doesn’t change “considerable time” language

Renaissance Macro

  • Fed’s more hawkish outcome may be priced into markets now, economist Neil Dutta wrote in note
  • “We cannot be entirely sure” how hawkish FOMC meeting will be

SGH Advisors

  • FOMC may change forward guidance language, CEO Sassan Ghahramani wrote
  • Growing number of FOMC members appear to be pressing for change

Standard Chartered

  • FOMC meeting to have “moderately hawkish tone,” economist Thomas Costerg wrote in note
  • Fed members will note downward trend in unemployment rate, healthy payroll growth
  • “Considerable time” expected to be removed


  • Fed to change “considerable time wording, take more hawkish tone, Eric Green, head of U.S. rates and economic research, wrote in note
  • Fed policy is set to become more flexible, retain message that there will be slow path to normalization


Source: Bloomberg