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Will the Fed have to undo its rate hike?
cnbc ^ | 1-19-2016 | Ron Insana

Posted on 01/20/2016 8:49:58 AM PST by Citizen Zed

Well, I guess we can rule out another rate hike in January. That's what economists are saying, not that anyone seriously believed that the Federal Reserve was going to engage in back-to-back hikes after promising that rates would go up only gradually in the months ahead.

With Wall Street off to its worst annual start in history, stock prices have been but one indicator that the economy could slow in the weeks and months ahead. That should give the Fed pause.

Stocks, of course, have not been the only market-based gauge to suggest that both the domestic, and global, economies are weakening appreciably.

Bond market interest rates are moving lower around the world. The yield curve, here at home, has flattened while commodities prices, Tuesday's reflex rally notwithstanding, have fallen to levels associated with a slowdown, or in some cases, recession.

Most important, of late, is that the futures market for the federal-funds rate has begun to "price out" the possibility of another rate hike in March, while some interest rate markets are beginning to "price in" a reversal of the Fed's rate hikes as early as June. I too think the Fed will be forced to send rates back to zero and quite possibly take them into negative territory beginning as early as June.

(Excerpt) Read more at cnbc.com ...


TOPICS: Chit/Chat
KEYWORDS: bondcollapse; currencywar; fed; fedratehike; repudiation; tradewar
I think they will raise rates early and often to offset falling commodity prices and to prop up GDP.
1 posted on 01/20/2016 8:49:58 AM PST by Citizen Zed
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To: Citizen Zed

The only arrow they had left in their quiver was to THREATEN to raise rates. Actually DOING it was not a good thing. I am under the impression that they already have undone their raise, just not officially. The rates now are just the “sale price”.


2 posted on 01/20/2016 8:55:12 AM PST by cuban leaf (The US will not survive the obama presidency. The world may not either.)
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To: cuban leaf

Excellent comment. Nominal price and rates are not the same thing.

Economics won’t be stymied by any agenda. It works regardless, for good or ill.


3 posted on 01/20/2016 9:02:19 AM PST by fwdude
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To: Citizen Zed

I’m confused. Two FMOC meetings ago, the fed choose not to raise rates and the market went down because that was perceived as saying the economy wasn’t doing well enough to raise rates. The last FMOC meeting, the fed raised rates and now the market is down because the economy isn’t doing well enough to raise rates?

What am I missing? Other than the fact that no one knows why the market is ever up or down but a lot of people want to go on TV and pretend they do.


4 posted on 01/20/2016 9:04:33 AM PST by DugwayDuke
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To: Citizen Zed
And You Thought QE Was Over: The Fed Will Monetize Half Of This Year's U.S. Treasury Issuance

http://www.zerohedge.com/news/2016-01-19/and-you-thought-qe-was-over-fed-will-monetize-half-years-us-treasury-issuance

5 posted on 01/20/2016 9:05:10 AM PST by amorphous
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To: DugwayDuke
The confusion comes from the fact that the market was always headed down, but the MSM and the Administration kept pushing the false story that the economy was doing great and recovering.

When the Fed chose to raise rates, the lemmings decided that it was a sign that the MSM and Administration might not actually be lying to them.

However, the lemmings finally now realize they've been lied to all along.

6 posted on 01/20/2016 9:27:22 AM PST by who_would_fardels_bear
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To: Citizen Zed

If the Fed turns around so soon and drops rates, they’re going to look clueless (and the not-so-secret is they are).


7 posted on 01/20/2016 9:49:39 AM PST by Flick Lives (One should not attend even the end of the world without a good breakfast. -- Heinlein)
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To: who_would_fardels_bear

That is equally confusing. If the MSM and Administration were pushing a false story of an improving economy, then a Fed rate raise would have been consistent with that story. A failure to raise rates by the fed would have indicated that the MSM and administration were lying.

How do you explain that your story may have been true of the previous FMOC meeting when the feds did not raise rates and the market went down but your story is inconsistent with this last FMOC went the Fed did raise rates?


8 posted on 01/20/2016 9:53:36 AM PST by DugwayDuke
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To: Citizen Zed

Wouldn’t do much good to undo it. The bond collapse will eventually happen anyway.


9 posted on 01/20/2016 10:19:55 AM PST by familyop ("Welcome to Costco. I love you." --Costco greeter in "Idiocracy")
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To: cuban leaf

The market has already priced out half of the 25 bp increase.


10 posted on 01/20/2016 1:57:21 PM PST by Georgia Girl 2 (The only purpose of a pistol is to fight your way back to the rifle you should never have dropped)
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To: cuban leaf

It was never about saving the economy. It’s about saving the markets.


11 posted on 01/27/2016 12:34:09 PM PST by Sam Gamgee (May God have mercy upon my enemies, because I won't. - Patton)
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To: DugwayDuke

The Fed is playing a con game it is losing. They are screwed now whatever they do.


12 posted on 01/27/2016 12:35:40 PM PST by Sam Gamgee (May God have mercy upon my enemies, because I won't. - Patton)
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