This is a no brainer. Look at the bond market (2 year), look at the fed futures, look at Greenspan's history of telegraphing moves, look at the recent fed gov comments, etc...... Here's the situation as I see it, Fed moves +0.25 and the market rips up. That's my prognostication from peering into the crystal ball.
i wonder if a mention of "perceptions of structural imbalances in the supply of refined crude oil products" would suggest a pass the next time around... otoh, the demand for materials and labor for rebuilding after big storms might countervale the damping effect of higher energy prices. either way, it all reads as higher prices which is taken to be synonymous with inflation, which argues for the hike.
Very interesting. Never have I seen so much speculation about a potential rate hike on ET. For the record, here's my prediction. The fed will not raise rates, and will cite controlled economic growth combined with Katrina as the reason. They will also imply a decent chance of raising rates next time. As for market reaction, my crystal ball (much requested picture of my trading station including my blue crystal ball to come soon) says this will be exactly what the market expects, so we'll get a fake one way, then retrace plus some. Taking on more risk, I say the market sells off on the news but closes up for the day. And that analysis plus five bucks will get you a coffee at Starbucks. I am reasonably confident about the pause. The rest of it is pure speculation. I'd also like to add that the market is ripe with summer newbies. A great deal of money has been made with non-existant stop-losses and doubling down on losers. It has been hundreds and hundreds of days since we've had a 2% daily move in the DJIA. These facts may suggest that we are due for another change in the markets, or they may tell us that it's different this time.
I mean to say it goes up. If the Fed pauses or heaven forbid, cuts that will telegraph that the US is in big doo-doo. We all know it is anyway but the Fed will not want to communicate this. When they raise, this will communicate that the economy is strong and will/has weathered (pardon the pun) the recent shocks.