With the punditry obsessing over the March FOMC meeting, where odds earlier today hit 100% of a 50bps rate hike before easing modestly (and more than 6 hikes for all of 2022)... ... the real action is in the February Fed funds contract which has spiked to 13bps, suggesting 5bps of tightening relative to the effective Fed funds rate of 0.08%. Why is this notable? Because the February contract expires on Feb 28, more than two weeks before the March 16 FOMC decision. This means that someone is preparing for an intermeeting rate hike, some time before March. And plugging in the numbers, the 13bps in the Feb contract means that there is now a 30% chance of an emergency rate hike. Impossible? Not according to Fed watcher and SGH Macro strategist Tim Duy who writes that he would "not be surprised by an intermeeting move either tomorrow Friday or by Monday. I know, this is crazy aggressive." Aggressive? yes. Crazy? perhaps - after all the Fed is still buying bonds as part of its ongoing QE which is expected to conclude in late February/early March. In other words, we may soon face the monetary paradox of the Fed hiking rates even as the Fed is still easing monetary policy through QE, and the biggest joke here - the Fed would be tightening conditions to contain inflation that is almost entirely supply-driven and which the Fed has no control over. Of course, the Fed has done crazier things - like backstopping the entire corporate bond market and effectively nationalizing it during the peak of the covid crisis. So while we don't know if the 30% odds of an emergency rate hike are accurate, be on the watch for an emergency Fed declaration tomorrow and Monday at 8:00am ET which is the Fed's preferred time for unexpected pre-market announcements. https://www.zerohedge.com/markets/whispers-emergency-fed-rate-hike-soon-tomorrow
zerohedge is a broken clock that is right twice a day. Remember Sept 2019. It nailed that. I think they're right here too.
Zerohedge reported on JPMorgan's "Whisper number" of a potential negative CPI print yesterday. We see how well that played out. I like some of ZH's writings, but they just seem to be hyping every damned rumor out there.
And by the way, I am damned sure that "whisper" of an emergency rate hike intermeeting was sparked by Bullard's 100 BPS by July comment today, which sparked the selloff mid-day.
Honestly, ZH is my favorite site to read for financial and political. Sure they spin a lot of hype and theories, but it's good to flex your creative thinking when it comes to the financial world. Think of how much far out shit has actually happened in the world of finance that no one else would have imagined 20 years ago.
What a .25% rate hike does tomorrow? Nothing really. Fed is not in any panic mode. They realize the rate hike just won't do anything. Useless. They want to show the market that Fed is in control and no panic.
That's their problem, they have lost credibility with me by being drama queens. But there's a market for sensationalism, sheeple for the most part love a bit of gossip and bs.