{"id":13601,"date":"2015-10-20T07:50:00","date_gmt":"2015-10-20T12:50:00","guid":{"rendered":"http:\/\/olduvai.ca\/?p=13601"},"modified":"2015-10-20T07:50:00","modified_gmt":"2015-10-20T12:50:00","slug":"peak-debt-peak-doubt-peak-double-down","status":"publish","type":"post","link":"https:\/\/olduvai.ca\/?p=13601","title":{"rendered":"Peak Debt, Peak Doubt, & Peak Double-Down"},"content":{"rendered":"

Peak Debt, Peak Doubt, & Peak Double-Down<\/a><\/h3>\n

Time to Hike Rates<\/strong>
\nIt makes little sense to me why the market is only pricing a 6% probability of a rate hike at the October meeting, 30% for December, and only a near 50\/50 probability all the way out to March 2016.\u00a0 The statutory mandates of the Fed as stated in the Federal Reserve Act are \u201cmaximum employment, stable prices, and moderate long-term interest rates\u201d.\u00a0 All three have been fully realized.<\/em><\/strong><\/p>\n

The unemployment rate is 5.1% (full-employment).\u00a0 Core CPI has been stable for years and printed 1.9% yesterday; remarkably close to the Fed\u2019s self-imposed target of 2%.\u00a0 For a few years, Treasury rates have been stable at near-historical low levels. In addition, the 4-week moving average of Unemployment Claims fell to its lowest level since 1973.\u00a0 The most recent employment report was a bit weaker than expected, but it fell within a standard margin of error.\u00a0 Yet, the Fed continues to remain at the emergency rate of 0.0%.<\/p>\n

At the September meeting, the FOMC talked up the economy, but refrained again from hiking rates, citing \u201cinternational developments\u201d.\u00a0By making this decision, the Fed has to be careful it does not also provide an \u2018emerging markets put\u2019.<\/strong><\/p>\n

As the October meeting approaches, international developments have settled down.\u00a0<\/strong>\u00a0Emerging market stocks indexes and currencies have bounced since the September FOMC meeting. Chinese markets in particular have calmed down and have traded higher. The US stock market is higher. The trade-weighted dollar is lower. Credit spreads are tighter.\u00a0The arguments for a hike at the October or December meeting should have increased not decreased.<\/strong><\/p>\n

The recalibration in rate hike probabilities could be the result of the \u201cdata dependent\u201d language which has never been adequately defined.<\/strong>\u00a0 It is suspect to believe that monetary policy for an $18 trillion complex global economy is being determined by a backward looking piece of monthly economic data.<\/p>\n

…click on the above link to read the rest of the article…<\/p>\n","protected":false},"excerpt":{"rendered":"

Peak Debt, Peak Doubt, & Peak Double-Down Time to Hike Rates It makes little sense to me why the market is only pricing a 6% probability of a rate hike at the October meeting, 30% for December, and only a near 50\/50 probability all the way out to March 2016.\u00a0 The statutory mandates of the […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[2],"tags":[172,303,305,4512,10008,2468,1154,431,534,7889,824,4318],"class_list":["post-13601","post","type-post","status-publish","format-standard","hentry","category-economics","tag-cpi","tag-fed","tag-federal-reserve","tag-fomc","tag-guy-haselmann","tag-interest-rate-hike","tag-interest-rate-policy","tag-interest-rates","tag-monetary-policy","tag-scotiabank","tag-unemployment","tag-zerohedge"],"_links":{"self":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/13601","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=13601"}],"version-history":[{"count":1,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/13601\/revisions"}],"predecessor-version":[{"id":13602,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/13601\/revisions\/13602"}],"wp:attachment":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=13601"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=13601"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=13601"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}