Fed Finishes 54th Consecutive Meeting With No Hike, Hints At Dovish Delay

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... 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:

 

But broadly, bonds have led and stocks lagged since the June Fed meeting...

 

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...

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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.

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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.

And perhaps more intteresting, the FOMC word count has largely normalized, and at 539, is down to levels not seen since August 2012:

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And finally (h/t @RudyHavenstein) - this sing seems to be wasted now...

Charts: Bloomberg