Investors Are Finally Getting With The Fed's Program — Are You?

Investors Business Daily ^ | October 11, 2016 | JED GRAHAM

[expat_panama]

Financial markets are beginning to believe the Federal Reserve.

That's the simplest explanation for the tumble that major stock indexes took on Tuesday, which saw the 10-year Treasury yield rise to a four-month high and the U.S. dollar index hit its highest level in seven months.

While the U.S. central bank's key overnight lending rate is barely above zero and policymakers have repeatedly reined in their intentions for further hikes, markets have taken each Fed pronouncement with a grain of salt. Whether investors doubted the Fed's resolve or its economic forecast, markets have been pricing in an even lower-rate future than the Fed has telegraphed. No longer — at least not to a significant extent.

When the Fed's rate committee last met on Sept. 21, members' projections pointed to a hike in December and two rate hikes in 2017. Yet markets, while on board with the December hike, persisted in pricing in less than a 33% chance of a subsequent hike before the fourth quarter of 2017...

...the rise in Treasury yields has come after a September jobs report showed a smaller-than-expected 156,000 gain...

...How can you tell if a jobs report is too hot, too cold or just right? Markets may react negatively or positively on the day of the report, but the key for investors is to stay abreas...

...good news is that the markets have come most of the way in adjusting to the Fed's timetable. Yet, the Fed has been pretty unreliable in its predictions, so markets may still need to adjust — one way or another — if policymakers turn out to be too optimistic or pessimistic when it comes to growth, inflation and the job market.

[expat_panama]

Good Morning!  It's take the miney & run time!  Futures say both stocks & metals are -1.4% --this after yesterday's 1+%  stock rout (IBD downgrades the trend to "market under pressure") while gold/silver are still at $1,256.44/$17.60.

--and on top of all this we're also finally getting out econ reports:

7:00 AM MBA Mortgage Index
10:00 AM JOLTS - Job Openings
10:30 AM Crude Inventories
11:00 AM Crude Inventories
2:00 PM FOMC Minutes

News:

Intellectual Myopia with Insider Trading - Richard Epstein, Defining Ideas
New Stock Market Risk: Democratic Election Sweep - Adam Shell, USAT
Why Don't More Economists Support Trump? - Jon Wiener, The Nation
E-Mails Reveal Different Clinton on Free Trade - Chris Matthews, Fortune
Trump Understanding of Trade Exactly Backwards - Caroline Baum, MW
Mont Pelerin Society Shows Capitalism Alive & Well - Fred Smith, Forbes
Edward Stringham Makes Anarcho-Capitalism Case - David D'Amato,L&L
Cybersecurity Is a Source of Unease for Investors - Cindy Fornelli, IBD

Threads on the FR:

• William Murchison: When Things Fall Apart
• Most Americans Think Government's Too Big, So Why Are They Backing Hillary?
• Ford idles Mustang plant amid slow sales
• German exports post biggest rise in more than six years
• Did US Ally Qatar Free Imprisoned Americans in Exchange for Al Qaeda Terrorist?

[Caipirabob]

Da, tovarisch, with Fed, there is “Our way and NO WAY”...

[Wyatt's Torch]

It was obvious early 2015 that the FOMC would be “Decemberists”. Same this year. Now, as then, there was no real reason but they will to show they will. Nothing more.

[expat_panama]

there was no real reason but they will to show they will.

--and everyone seems to think it's a good idea ("...markets, while on board with the December hike...").  My only hope is that "...the markets have come most of the way in adjusting to the Fed's timetable..." and we won't have another crash like the last time..