Is a July rate increase back on now because of the strong June jobs report? If not July, then September?
June’s unexpectedly strong 287,000 gain in nonfarm payrolls – more than 100,000 above Street forecasts – has some people believing that the Federal Reserve will now once again change its mind and increase interest rates sometime this summer, either later this month or at its September conclave.
But the bond market isn’t buying it, and neither am I. The yield on the benchmark 10-year Treasury note ended last Friday at a new record low of 1.36%, down eight basis points for the week. That doesn’t sound like bond investors believe that a rate increase is imminent. And it’s hard to believe that the Fed, which won’t make a move unless the sun, moon and stars are in perfect alignment, will suddenly take the big rebound in nonfarm payrolls as the green light to raise rates. It will take a lot more than that. Continue reading "The Gang That Couldn't Shoot Straight"
The Federal Reserve's interest rate liftoff schedule for this year is slowly but surely slip slidin' away, like a space launch aborted by bad weather. It makes you wonder which government agency is directing U.S. monetary policy, the Fed or NASA.
The minutes of the Fed's June 16-17 monetary policy committee meeting released July 8 were a lot more dovish than the announcement that immediately followed the meeting. It now looks like a September rate liftoff isn't as baked in the cake as many previously believed just a few weeks ago.
Since then, of course, a lot has changed, almost all of it conspiring against an early rate increase. September is a lot less likely to happen now, and even December looks doubtful. I didn't think the Fed was courageous or confident enough to make a move this year anyway, so the events of the past few weeks make me more comfortable with that position. Continue reading "Slip Slidin' Away"
While the MSM instigates reasons why we should give a damn about what people who have little control over the T bond market were thinking at the last meeting, why don’t we just tune it all out and manage the markets instead?
The top panel shows the 30 year yield marching toward the traditional limiter AKA the 100 month EMA. The pattern measures to 4.5% or so, so there could be a spike above and a hell of a lot of hysteria at some point. That’s the collective markets; 98% hype, hysterics and emotion and 2% rational management. Either the 30 year yield is going to do something it has not done in decades (break and hold above the EMA 100) or it is not. Simple. Continue reading "FOMC Minutes… Head for the Hills!!!"
A majority of Federal Reserve policymakers want to continue extraordinary bond purchases to help boost the economy at least through the middle of the year, according to minutes from the Fed's last meeting released Wednesday.
But many members indicated they want to slow and eventually end the program soon after that, as long as the the job market and economy show sustained improvement. The Fed's purchases of about $85 billion a month in Treasury and mortgage bonds are intended to lower long-term interest rates and support more borrowing and spending.
The minutes of the Fed's March 19-20 meeting were released at 9 a.m. EDT five hours earlier than planned after the Fed inadvertently sent them a day earlier to congressional staffers and lobbyists. Continue reading "Minutes show Fed backs stimulus through midyear"