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Big FOMC Meeting Today
Posted on 12/17/14 at 10:43 am
Posted on 12/17/14 at 10:43 am
Markets have been priced ~60-70% for mid 2015 rate hikes, slightly extending out with the geopolitical events recently.
Big things to watch for:
1. Does the Fed remove "considerable period" from the statement? This is important since historically after the Fed has removed this phrase from their statement, they have hiked rates ~6 months afterwards.
2. If they don't remove the language, does Yellen give color in the press conference? Art Cashin even noted this morning that he thought they would give themselves more leeway by keeping the language but talking about it in the press conference, hence they don't give themselves or the market any additional set timelines.
3. How much do they reference the geopolitical issues and in what color do they reference the oil price decline? If the Fed statement (or Yellen's press conference) mention anything about Russia or oil as a headwind then you'll likely see rate hike pricing moving farther back in 2015.
Big things to watch for:
1. Does the Fed remove "considerable period" from the statement? This is important since historically after the Fed has removed this phrase from their statement, they have hiked rates ~6 months afterwards.
2. If they don't remove the language, does Yellen give color in the press conference? Art Cashin even noted this morning that he thought they would give themselves more leeway by keeping the language but talking about it in the press conference, hence they don't give themselves or the market any additional set timelines.
3. How much do they reference the geopolitical issues and in what color do they reference the oil price decline? If the Fed statement (or Yellen's press conference) mention anything about Russia or oil as a headwind then you'll likely see rate hike pricing moving farther back in 2015.
2
Posted on 12/17/14 at 10:47 am to BennyAndTheInkJets
A month ago, I would have said "considerable period" was dead and June/July 2015 would see a hike.
Now? With Oil dropping, Russia having problems, and even with this Cuba news, who knows? The entire short term calculus is now jumbled.
Fed in recent years seems to only want to move levers if they are sure what the end result will be. I think they just lost their assurance.
I think the still remove considerable period from the statement, but I think Yellen at the PC mentions the new issues.
Now? With Oil dropping, Russia having problems, and even with this Cuba news, who knows? The entire short term calculus is now jumbled.
Fed in recent years seems to only want to move levers if they are sure what the end result will be. I think they just lost their assurance.
I think the still remove considerable period from the statement, but I think Yellen at the PC mentions the new issues.
This post was edited on 12/17/14 at 11:03 am
Posted on 12/17/14 at 1:11 pm to BennyAndTheInkJets
Damnit Replaced "considerable period" with the phrase that "it can be patient" regarding the rate hike.
No reference to Russia/Oil, just referenced the focus on inflation and upgraded the labor outlook. This may have just added more confusion to the markets. Is "patient" more or less dovish/hawkish than "considerable period"?
My take, same with what Yellen has said and Bernanke has said as post chairman many times, its just data dependent. If data keeps coming in strong then its June/July, if it weakens it'll be later.
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