hornblower
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ampro said:
can you please explain the print you are waiting for ?
and how it works
it's merely a consensus of Fed Fund Ftrs estimates relating to the level of strength regards a rates hike.
given the recent data prints, including a disappointing Beige Book reading + Friday's poor payrolls print, the Fed Fund Ftrs boy's are pricing in a 20-25% chance of the Fed hiking tomorrow.
actually, the mainstream analysts are supposedly estimating it as a 'close call' - but where they derive that from god only knows.
particularly as it's common knowledge the Fed are adjudging any future hikes based wholly upon recurring & continuing "data output" I guess we'll see huh?
given the recent data prints, including a disappointing Beige Book reading + Friday's poor payrolls print, the Fed Fund Ftrs boy's are pricing in a 20-25% chance of the Fed hiking tomorrow.
actually, the mainstream analysts are supposedly estimating it as a 'close call' - but where they derive that from god only knows.
particularly as it's common knowledge the Fed are adjudging any future hikes based wholly upon recurring & continuing "data output" I guess we'll see huh?
wasp
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PIMCO's Gross: 'Fed will definitely pause'
Manager of the world's largest bond fund says the Fed will not raise rates when it meets next week.
August 4 2006: 1:05 PM EDT
NEW YORK (Reuters) -- The Federal Reserve will not raise interest rates, pausing for the first time in more than two years, when its policy-setting panel meets next week, the manager of the world's largest bond fund said Friday.
"The Fed will definitely pause on Tuesday," Bill Gross, chief investment officer at Pacific Investment Management Co., said in comments e-mailed to Reuters from his headquarters in Newport Beach, California.
FED FOCUS
To soothe any concerns that the Fed is relaxing its stance on inflation, Gross said, the statement accompanying the August 8 rate decision will have "strong inflationary language to control animal spirits in the bond market."
Depending on the severity of the housing market downturn, Gross said it is possible the Fed could begin cutting interest rates by early 2007.
"Typically, the Fed goes too far and eases six months after their last hike," he said. "I believe that is the case now, as does the longer end of the (yield) curve - all maturities are trading below 5 percent."
Gross said he believes the fed funds rate will be between 4 percent and 4.50 percent. "The bear market (in bonds) is dead," he added.
Gross' comments followed a report from the Labor Department early Friday that showed U.S. employers added fewer jobs than expected last month and that the unemployment rate jumped unexpectedly.
That data sparked a rally in Treasuries, as investors viewed the report as giving the Fed the flexibility to stop raising short-term rates after 17 straight increases of a quarter percentage point each dating back to June 2004. The yield on benchmark 10-year Treasury notes fell as low as 4.88 percent, the lowest since early April.
Manager of the world's largest bond fund says the Fed will not raise rates when it meets next week.
August 4 2006: 1:05 PM EDT
NEW YORK (Reuters) -- The Federal Reserve will not raise interest rates, pausing for the first time in more than two years, when its policy-setting panel meets next week, the manager of the world's largest bond fund said Friday.
"The Fed will definitely pause on Tuesday," Bill Gross, chief investment officer at Pacific Investment Management Co., said in comments e-mailed to Reuters from his headquarters in Newport Beach, California.
FED FOCUS
To soothe any concerns that the Fed is relaxing its stance on inflation, Gross said, the statement accompanying the August 8 rate decision will have "strong inflationary language to control animal spirits in the bond market."
Depending on the severity of the housing market downturn, Gross said it is possible the Fed could begin cutting interest rates by early 2007.
"Typically, the Fed goes too far and eases six months after their last hike," he said. "I believe that is the case now, as does the longer end of the (yield) curve - all maturities are trading below 5 percent."
Gross said he believes the fed funds rate will be between 4 percent and 4.50 percent. "The bear market (in bonds) is dead," he added.
Gross' comments followed a report from the Labor Department early Friday that showed U.S. employers added fewer jobs than expected last month and that the unemployment rate jumped unexpectedly.
That data sparked a rally in Treasuries, as investors viewed the report as giving the Fed the flexibility to stop raising short-term rates after 17 straight increases of a quarter percentage point each dating back to June 2004. The yield on benchmark 10-year Treasury notes fell as low as 4.88 percent, the lowest since early April.
wasp said:
they're despatched via wire service bullets along with the other mainstream news snippets.
you should be able to access similar type items from your platform providers news ticker maybe?
I dunno how comprehensive your package is, but I guess a decent platform ought to include some kind of data output flow?
wasp
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To pause or not to pause?
Prior to Friday, traders had been on the fence about whether the Fed was likely to raise or pause at the Aug. 8 meeting, according to fed funds futures traded in Chicago.
On one hand the economy seemed to be slowing - weak reads on retail sales, housing and second-quarter GDP growth made that clear. Plus, Fed officials had said as much. But that didn't necessarily have to mean that the Fed was gearing up to pause.
Then the July jobs report was released Friday morning and all that changed. The report showed smaller-than-expected job growth and a bigger-than-expected rise in unemployment - the last link in the economic slowdown chain.
Yippee! Stocks rallied; bonds surged; bets for a rate hike Tuesday dwindled down to 16 percent from 41 percent the previous day, according to Chicago futures trading.
And within an hour the rally was gone.
"The market seemed to realize almost immediately that the Fed pausing now because it is worried about economic growth is not a good thing for stocks," said Ken Tower, chief market strategist at CyberTrader. "Weaker economic growth means weaker profits."
Granted, the Fed could surprise investors and raise rates one more time Tuesday, but that doesn't seem likely.
"There is enough evidence to suggest that the Fed can sit on its hands for another six weeks and see how it goes," said Stephen Stanley, chief economist at RBS Capital.
Stanley was referring to the fact that the next Fed policy meeting after Tuesday's is not until Sept. 20th.
However, pause or no pause, "the whole notion that a pause in rate hikes is always good for stocks is ridiculous," said Michael Darda, chief economist at MKM Partners.
Ritholtz Capital Partners' Barry Ritholtz pointed out that historically, stocks only rise on average in the immediate aftermath of a Fed pausing. More often than not, the S&P 500 is lower six or 12 months after the pause.
MKM's Darda said that stock investors tend to think an end to rate hikes is a positive because they worry that the Fed will tighten monetary policy too much and send the economy into a recession. Such a scenario would also crimp corporate profits, and raise price-to-earnings ratios, making stocks more expensive relative to earnings.
However, he said that there is little reason to assume that a recession is on the way, with the only troubling sign being the inversion of the yield curve - a bond market aberration that has often predated recessions.
In addition, there is no reason to suggest that should the Fed pause next week, they won't resume lifting rates in the fall.
Darda said that he thinks the economy will show greater strength in the fall, which could lead to a need for more rate hikes. Additionally, all the analysts said that they were worried that rising inflation would force more rate hikes going forward, a scenario even more troubling for stocks.
Prior to Friday, traders had been on the fence about whether the Fed was likely to raise or pause at the Aug. 8 meeting, according to fed funds futures traded in Chicago.
On one hand the economy seemed to be slowing - weak reads on retail sales, housing and second-quarter GDP growth made that clear. Plus, Fed officials had said as much. But that didn't necessarily have to mean that the Fed was gearing up to pause.
Then the July jobs report was released Friday morning and all that changed. The report showed smaller-than-expected job growth and a bigger-than-expected rise in unemployment - the last link in the economic slowdown chain.
Yippee! Stocks rallied; bonds surged; bets for a rate hike Tuesday dwindled down to 16 percent from 41 percent the previous day, according to Chicago futures trading.
And within an hour the rally was gone.
"The market seemed to realize almost immediately that the Fed pausing now because it is worried about economic growth is not a good thing for stocks," said Ken Tower, chief market strategist at CyberTrader. "Weaker economic growth means weaker profits."
Granted, the Fed could surprise investors and raise rates one more time Tuesday, but that doesn't seem likely.
"There is enough evidence to suggest that the Fed can sit on its hands for another six weeks and see how it goes," said Stephen Stanley, chief economist at RBS Capital.
Stanley was referring to the fact that the next Fed policy meeting after Tuesday's is not until Sept. 20th.
However, pause or no pause, "the whole notion that a pause in rate hikes is always good for stocks is ridiculous," said Michael Darda, chief economist at MKM Partners.
Ritholtz Capital Partners' Barry Ritholtz pointed out that historically, stocks only rise on average in the immediate aftermath of a Fed pausing. More often than not, the S&P 500 is lower six or 12 months after the pause.
MKM's Darda said that stock investors tend to think an end to rate hikes is a positive because they worry that the Fed will tighten monetary policy too much and send the economy into a recession. Such a scenario would also crimp corporate profits, and raise price-to-earnings ratios, making stocks more expensive relative to earnings.
However, he said that there is little reason to assume that a recession is on the way, with the only troubling sign being the inversion of the yield curve - a bond market aberration that has often predated recessions.
In addition, there is no reason to suggest that should the Fed pause next week, they won't resume lifting rates in the fall.
Darda said that he thinks the economy will show greater strength in the fall, which could lead to a need for more rate hikes. Additionally, all the analysts said that they were worried that rising inflation would force more rate hikes going forward, a scenario even more troubling for stocks.
the recent data has merely further compounded the short dollar stance (reflected in the technicals from the big numbers on Cable @ 81/82 & Euro @ 25/26).
I'm not sure bout the immediate effect (post decision), but most mid term players are pretty much short the buck & bedded in with extended stops from those levels & are now sidelined on next level compounds till after the announcement/statement. I don't guess too many will be long dollars going into tomorrow. Sheer weight of input ought to weigh on the buck with added short momentum wouldn't you think?
even if they hike, traders know a pause is on the cards due to the lag on prev hikes affecting the growth prospects. + you have ECB chiefs bleating bout further inflationary pressures etc.
With the yield differential coming under scrutiny, you can bet the buck will still be sold on rallies in the current climate.
I'm not sure bout the immediate effect (post decision), but most mid term players are pretty much short the buck & bedded in with extended stops from those levels & are now sidelined on next level compounds till after the announcement/statement. I don't guess too many will be long dollars going into tomorrow. Sheer weight of input ought to weigh on the buck with added short momentum wouldn't you think?
even if they hike, traders know a pause is on the cards due to the lag on prev hikes affecting the growth prospects. + you have ECB chiefs bleating bout further inflationary pressures etc.
With the yield differential coming under scrutiny, you can bet the buck will still be sold on rallies in the current climate.
Priceman
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wasp said:
Hi wasp, I think these were from www.fxstreet.com if you want to subscribe to their daily newsletter you can have them sent.
martin brown
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wasp said:
as i see it, the market has factored in a 78% chance of a pause.
so even if they do pause i dont see much more upside on this news. ie yes its almost baked in.
if they do hike, then expect some serious fireworks (because the BOE hike was a 33% market expectation, whereas an FOMC hike is just 22%).
even so.... the odds are they will not hike, and if this is so then i expect a little more upside (cable) momentum to carry through this week into thursday when i believe the cable is due for a turn...
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martin brown
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dc2000 said:
wow, almost 500 pips downside this week?!
ya think the highs are already in or you expect lots of volatility & swings?
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Priceman
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martin brown said:wow, almost 500 pips downside this week?!
ya think the highs are already in or you expect lots of volatility & swings?
Martin, I think he means the ups and down of his levels rather than hat kind of fall.... I could be wrong though
