I think it could be interesting to see the market reactions on the FED rate talks. Maybe it will give some ideas of what to expect on Wednesday... See below the index charts when FED's statements were released over the past 4 months. On the left: daily charts to see the market stage On the right: intraday chart to see market reaction January 28 January 7 December 17 November 19 October 29 October 8 charts courtesy of www.marketvolume.com
Changes to language regarding "considerable time" to "patience" with regards to when rate hikes will begin has been important. Like taper,which was undeterred by events, many feel fed is determined to begin to normalize rates and will modify "patience" language if the first hike is to be mid year. What will the market do? Along with the Greece negotiation breaking down today and, already two weeks into bullish PA, it appears to be a bearish setup for FOMC. My .02
I think if you go back to the day the federal reserve was started I don't think ever until probably the mid to late 90s did everyone pay so close to breaking down every word in every fed statement ...I actually think this just started over the last 10 or 15 years.....its really pathetic that this market hangs on every tiny vowel phrase and period that the fed mentions ....enough is enough....so tired of the statements that mean absolutely nothing but talk talk talk talk and more talk...raise the fucking rates already ......oh i forgot they aren't raising rates anytime soon. If they do it will be a huge 1/8th or 1/4% wow....they cannot go any higher because of the nearly $5 trillion dollar balance sheet....they can't raise rates because the banks are like drug addicts waiting for their next hit of QE ....its all smoke and mirrors. More lies. That's all it is.......they have to keep the game going on as long as they can....
back in the late 90's all they would talk about was how thick or not thick the briefcase that Greenspan was carrying to the meeting was. That was it.
yes i remember those days clearly, his whole fed rate hike talk has become a joke, today Jeremy siegel is talking about how the fed should hold off on hiking rates until the end of summer and I can guarantee you he will come out this summer saying how the fed should wait until the end of 2015 to raise them, its just one big joke day after day with talks about rates moving higher, stop the talking and do it. With GDP figures way up high, unemployment below 6% and millions of jobs added over the last few years why are rates still at 0%%%
The Fed will just be patient. There is no urgency to raise rates. The forex markets are doing the FOMC's job for them. The strengthening dollar is a de facto rate increase by increasing the real rate of return on dollar denominated, interest bearing assets. As long as our trading partners persist in weakening their currencies nothing needs to be done. In the meantime we can enjoy low inflation, very attractive interest rates, and a strong dollar. Kudos, once again, to the remarkable Fed.
Awesome! I had no idea that a rising dollar made banks pay more interest on deposits and CDs. You know, for all those relying on fixed income. Imagine how happy seniors will be when they realize they don't need the Fed to actually raise rates, so long as the dollar gets stronger.
relying on fixed income is an asset allocation problem and should be of no concern to the fed anymore than a young man with all his money in one stock.
With the minor, yet notable exceptions that 1. The Fed is concerned about income inequality and must recognize that seniors who were used to relying on a decent paying CD/interest rate to live can no longer do so. 2. Interest rates paid to these folks are primarily determined my the rate that the Fed sets. Other than that, yeah...why should the Fed care? Wall Street bonuses at records... Regarding the "all in one stock", you apparently haven't heard of SPY.
??? 60% SPY and your "relying on fixed income" plea kind of fall on deaf ears. We tried to tell them. Like my Bubbie always said, "A healthy man you feed, to a sick man you offer."