Mario Draghi isn’t saying too much new but European bonds are off their highs as he did say “We are becoming more confident that inflation will eventually head to levels in line with our inflation aim, but we also know that a very substantial degree of monetary accommodation is still needed for the upward inflation path to materialize.” He repeated that “We will …
Central Banks
The Day After / Philly mfr’g and claims / More…
United States With rate hike odds for December now at 62%, we reiterate our belief that the Fed is raising rates in 3 months. I believe the only thing that stops it is more where the S&P 500 (and how it handles QT) is rather than what the data says which will be highly influenced by the Hurricane rebuilds. I have to say this on the Fed’s focus on ‘financial …
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Reading statement was like watching painting dry
FOMC Reading the FOMC statement was actually as exciting as watching paint dry. The comments on the economy and inflation were pretty much similar to the July meeting. There was reference to the Hurricanes and the devastating impact but shouldn’t impact growth over the medium term. On what we cared most about today, QT will start in October. As to what they will …
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Why this market ‘is headed for a brick wall’
My latest commentary for CNBC.com. The original can be read here. We're finally here. About nine years after quantitative easing (QE) began, quantitative tightening (QT) is about to start. On Wednesday, after the Federal Open Market Committee releases its statement, Janet Yellen will follow with a press conference that she will do her best to make as boring as …
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And The Beige Book Says….
As the case throughout this whole economic recovery, the Fed’s Beige Book described the economic activity as having “expanded at a modest to moderate pace across all 12 Federal Reserve Districts in July and August.” Here are the other noteworthy bullet points: “Consumer spending increased in most Districts, with gains reported for nonauto retail sales and tourism, …
ISM services and another BoC rate hike
The August ISM services index rose to 55.3 from 53.9 in July but that was a touch below the forecast of 55.6. The average year to date is 56.3 and the October, pre election, print was 54.6. Thus, not much of a change since. New orders improved by 2 pts to 57.1 but still remains below the 6 month average of 58.8. Backlogs were higher by 1.5 pts to 53.5 which puts it in …
The Fed Minutes Say…
FOMC Minutes Bottom line with the just released FOMC minutes is this, the only thing the Fed seems comfortable committing to right now is QT in September “absent significant adverse developments in the economy or in financial markets.” As for when the fed funds rate might go up again, everyone had their own opinion that spanned the spectrum of thought, all with …
Dudley is reminding us again of what’s most likely to come
Quantitative Tightening If you had doubts about whether the Fed would begin quantitative tightening in September because of the recent inflation figures, NY Fed President Bill Dudley, a key member of the troika, is telling you AGAIN that it’s coming. He said “I think we’re still on the same trajectory we’ve been on for several years. Above trend growth, gradually …
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The FOMC: Relatively Soon
The FOMC statement is basically setting the stage for a September beginning to QT. The wording was this: “The Committee expects to begin implementing its balance sheet normalization program relatively soon, provided that the economy evolves broadly as anticipated.” The emphasis is certainly mine and “Relatively Soon” is exactly what Yellen said in her Congressional …
BoC hikes rates as expected
Canada The Bank of Canada as expected followed thru with a 25 bps rate hike to .75%. They said “Recent data have bolstered the Bank’s confidence in its outlook for above potential growth and the absorption of excess capacity in the economy. The Bank acknowledges recent softness in inflation but judges this to be temporary.” They said “temporary” because recent reads …
Peter is the Chief Investment Officer at Bleakley Advisory Group and is a CNBC contributor.