Conclusion: Very dovish & "guidance" is now a total joke.
New excuses: Global trade incl. reference to China & emerging markets, but expecting China or EM to improve btw now and next meeting is pure fantasy!
Economic projection: Lower dots incl. negative yield from one FOMC member.
Yellen is not only losing the market but also her boardroom - her Q&A was far from impressive and reeked from "class room" teaching and far from reality of negative impact of zero-bound.
I fear FED's window on hiking is closing and fast - this will create furthe uncertainty with several market players already putting odds of Fed hiking and cutting 50/50!
FED clearly have failed to provide consistent guidance and the "success" of the labor market is about to change negatively as this "pretend-and-extend" increases volatility and uncertainty.
Into closing market is:
Stocks: Small down
FX: US$ much weaker
Gold: Much higher...
I remain w. rest of 2015 being a theme of:
· Weaker US$, higher gold, and now preparing for recession by Q1-2016 in the US.
· Stocks: In doubt - we took out double top at 1997 in S&P-futures but closed below - "positive" incl. chances of global easing (-...if it works for assets, which I doubt" )
· "negative" - clearly no topline growth, and PLENTY of volatiity into both October and year-end.
Bad performance & night for FED.
Attached:
2 Yrs notes – massive move..
BN) Yellen Decision to Delay Fed Liftoff Points to Global Risks
(1)
+------------------------------------------------------------------------------+
Yellen Decision to Delay Fed Liftoff Points to Global Risks (1)
2015-09-17 19:55:23.598 GMT
(Updates to add graphic.)
By Craig Torres
(Bloomberg) -- The Federal Reserve kept its policy interest rate unchanged, showing reluctance to end an era of record monetary stimulus in a time of market turmoil, rising international risks and slow inflation at home.
"Recent global economic and financial developments may restrain economic activity somewhat and are likely to put further downward pressure on inflation in the near term," the Fed said in its statement.
Thursday's action signified more than anything the committee's uncertainty about how global events, such as the slowdown in China, translate into their outlook for U.S. growth.
'Tactical Delay'
"Discretion is the better part of valor," Ethan Harris, co- head of global economic research at Bank of America Corp. in New York, wrote in an e-mail. The move is a "tactical delay" to gather more information on risks to the forecast, and "as the labor market recovery rolls along, and with capital markets already showing signs of calm, the pressure on the Fed to hike will build at each meeting going forward."
The decision featured the first dissent this year by Richmond Fed President Jeffrey Lacker as policy makers faced one of the toughest decisions of Chair Janet Yellen's leadership of the Federal Open Market Committee.
Yellen 'Put'
It also bears its own set of risks, such as the perception of a "Yellen put," or the view that market volatility could stay the Fed's decision again.
"They put more emphasis on things that could go wrong than things that are going right," Harm Bandholz, chief U.S.
economist at UniCredit Bank AG in New York, said before the decision.
The U.S. economy is posting steady job gains and solid household spending. Fed officials, anxious not to tighten policy prematurely and risk having to reverse course and cut rates back to zero, weighed solid domestic fundamentals against uncertainties about the international outlook.
"The Committee continues to see the risks to the outlook for economic activity and the labor market as nearly balanced but is monitoring developments abroad," the statement said.
Global Developments
Slowing growth in China has rippled across the world, hitting commodity-producing countries hard. The MSCI Emerging Markets Index, which captures stock markets in nations such as Brazil, Chile, Egypt and China, is down 14 percent this year.
"The outlook for the global economy is being marked down and that is why markets are reacting," Laura Rosner, U.S.
economist at BNP Paribas, said before the decision. Market developments are giving policy makers "fundamental, new and real-time information," the former New York Fed staff analyst said.
Domestically, Fed officials are also grappling with an inflation rate that remains too low, rising just 0.3 percent for the 12 months ended July, according to the personal consumption expenditures price index, the Fed's preferred measure.
"The case for not going is that the inflation picture is still extremely murky, especially in light of developments in China," Ward McCarthy, chief financial economist at Jefferies LLC in New York, said before the decision.
The PCE index has run below the Fed's 2 percent target for more than three years. "They need to clarify" their inflation target strategy, McCarthy added.
Officials Thursday said they don't expect to attain their 2 percent goal until 2018, according to policy makers' median forecast.
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