Front-month Fed Funds futures have to trade below 99.50. That will "signal" the next tightening cycle.
I watched bond market very carefully, even though I didn't trade during 80s (1980s), I found current market very well close to it, no one want to hold treasuries anymore, expecting yield will go higher.
I think he said something yesterday about raising rates; here it is, âWhen the economic outlook has improved sufficiently, we will be prepared to tighten the stance of monetary policy and eventually return our balance sheet to a more normal configuration,â Mr. Bernanke promised. "PROMISED" that he would raise the rates, I cant wait wait for his promise to become reality. Im sure he will wait until massive bubbles have formed in every asset class across the globe and then decide to raise rates .25%. Go bernanke go, raise those rates.
Simple answer. Rates will be raised when we see signs of inflation and when unemployment starts to improve. Don't expect it for at least 6 months.
The problem is that US doesn't have the time wait for improving employment rate and inflation, (most inflation has gone out of US anyway by carry trade with USD). Without sufficient capital coming in US, treasury rate will go up. Obama can send more troop into Afghanistan, and helping lower unemployment number.
The carry trade liquidity story sounds like bs to me. Who is lending USD so speculators can buy assets abroad?Banks are not lending on a net basis. And as far as I know brokers arent even close to US banks as far as % of credit extension. So it isnt IB is who is fueling an asset boom. USD has been negatively correlated with the stock market, this does not mean there is tons of USD 'carry trade' liquidity avaliable