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Is the Bond Market About to Call the Fed’s Inflationary Bluff?

Perhaps the single biggest development this year, as far as the markets were concerned, was the Fed admitting on the record that it has no idea what is going on with inflation. This represents a kind of endgame for the Fed. Since the early ‘80s, the Fed has been actively understating inflation via a variety […]


“Everything’s Great!”

Authored by Kevin Muir via The Macro Tourist blog, So much for that call. I thought there was no way Yellen would put her fingers in her ears, close her eyes, and shout “nah nah nah – I can’t hear you” to the speculative fervour that has gripped markets. Well, there is no way to […]


Full Preview Of Janet Yellen’s Last Ever Rate Hike

In previewing today's FOMC decision, which will also be Janet Yellen's last rate hike decision and press conference before she is replaced by Jay Powell, there is a TL/DR version, which is summarized by the chart below and which shows that according to the market, the probability of a rate hike today is 100%… which […]


The Fed is Arranging Deck Chairs on the Titanic (the Iceberg Comes in 2018).

The Fed concludes its final FOMC meeting of the year today. The entire financial world expects the Fed to raise rates a final time. This will mark the fifth rate hike since December 2015, and the fourth of the last 12 months. Throughout this time period, the Fed has routinely stated that it is confused […]


FOMC Signals Dovish Inflation Concerns, Warns “Sharp Reversal” In Markets Could Damage Economy

With a dumping dollar and collapsing yield curve since November's FOMC, all eyes are on the Minutes for any signals of The Fed hawkishly ignoring inflation concerns but instead a few Fed officials opposed near-term hikes (on the basis of weak inflation). Furthermore, several Fed officials warned of the potential for bubbles, "in light of […]


FOMC Leaves Policy Unchanged, Upgrades Growth To “Solid” From “Moderate”

In perhaps the least anticipated FOMC statement in months – with expectations of no rate-change and normalization on path – all eyes were on inflation/growth wording. Some feared a more dovish Fed might upset the exuberant growth narrative that is embedded into equity valuations (but not the yield curve), but The Fed seemed slightly more […]


FOMC Minutes Show Schizophrenic Fed Fears Low Inflation Is Here To Stay But Push For Another Rate Hike In 2017

The yield curve has collapsed since The Fed's hawkish September statement (but bank stocks have soared) as rate-hike odds hit 80% and balance sheet normalization is believed to be like watching paint dry. All eyes going into the FOMC Minutes were on just how transitory The Fed believed inflation's dip was – "many Fed officials […]


Key Events In The Coming Week: CPI, Retail Sales And FOMC Minutes

In the traditionally quiet post-payrolls week, attention will focus on the US CPI report, retail sales and FOMC minutes as well as the Catalonia vote and Eurozone industrial production. Separately, we have UK construction, Chinese PMIs, Japanese BoP and inflation in the Scandies. A breakdown of the key events this week from BofA: FOMC minutes […]


Watch Live: Janet Yellen Addresses Community Bankers In St.Louis

Update: Yellen didn’t discuss her outlook for interest rates or the economy in her prepared remarks. Bloomberg reports that Federal Reserve Chair Janet Yellen said the U.S. central bank has been working to ensure that regulations are tailored to the size, complexity and roles of the lenders it oversees. “For community banks, which by and large avoided […]


The Fed Freaks Out: the Inflation Genie Is Officially Out of the Bottle

Something truly astonishing is happening at the Fed. The Fed FOMC minutes for July contained an incredible admission although most missed it. During that meeting Fed officials implicitly admitted that the Fed had no clue about inflation. This admission was largely swept under the rug. But we took note. And we started preparing accordingly. However, […]


Watch Live: Hawkish Yellen Says Fed May Have Misjudged Inflation, Labor Market

Update: In her prepared remarks, Yellen crucially said, “A more important issue from a policy standpoint is that some key assumptions underlying the baseline outlook could be wrong in ways that imply that inflation will remain low for longer than currently projected.” As Bloomberg explains, she is stating a bit more clearly than before that […]


FOMC Shrugs Off Transitory Hurricane Weakness, Will Start To Unwind Balance Sheet In October

Today's the day. On Nov 25, 2008 The Fed announced it would begin buying assets for its own account to save the world. In Oct 2014, The Fed ended its QE3 buying program but continued to reinvest the proceeds to maintain its $4.4 trillion balance sheet. Today, Janet Yellen announced the balance sheet will be […]


Fed Begins Balance Sheet Unwind, Expects One More Rate Hike In 2017

Today's the day. On Nov 25, 2008 The Fed announced it would begin buying assets for its own account to save the world. In Oct 2014, The Fed ended its QE3 buying program but continued to reinvest the proceeds to maintain its $4.4 trillion balance sheet. Today, Janet Yellen announced the balance sheet will be […]