{"id":46617,"date":"2019-06-13T14:15:46","date_gmt":"2019-06-13T19:15:46","guid":{"rendered":"https:\/\/olduvai.ca\/?p=46617"},"modified":"2019-06-13T14:15:53","modified_gmt":"2019-06-13T19:15:53","slug":"the-market-is-almost-always-wrong-about-what-the-fed-will-do-chart","status":"publish","type":"post","link":"https:\/\/olduvai.ca\/?p=46617","title":{"rendered":"\u201cThe Market is Almost Always Wrong About What the Fed Will Do\u201d: Chart"},"content":{"rendered":"\n<h3 class=\"wp-block-heading\"><a href=\"https:\/\/wolfstreet.com\/2019\/06\/11\/the-market-is-almost-always-wrong-about-what-the-fed-will-do-chart\/\">\u201cThe Market is Almost Always Wrong About What the Fed Will Do\u201d: Chart <\/a><\/h3>\n\n\n\n<p class=\"wp-block-paragraph\"><strong>The rate cuts for 2019 are a pipe-dream: Goldman Sachs and Deutsche Bank.<\/strong><\/p>\n\n\n\n<p class=\"wp-block-paragraph\">It now makes two: The chief economists at investment banks Goldman Sachs and Deutsche Bank have warned their clients that the already priced-in rate cuts this year that markets are so excited about may not materialize.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">To proof their point, Deutsche Bank chief economist Torsten Slok and his team dug through the data going back to 2001, comparing the path of the federal funds rate \u2013 which reflects the Fed\u2019s rate hikes and cuts \u2013 to the futures markets for the federal funds rate. They concluded: \u201cThe market is almost always wrong about what the Fed will do.\u201d<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">And they asked: \u201cWhy would the market be right today?\u201d That was a rhetorical question.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Yet, these bets \u2013 that are \u201calmost always wrong\u201d about the Fed\u2019s rate decisions \u2013 are now being incessantly cited to show that the Fed will cut its target range for the federal funds rate. At the moment, these traders see an 80% probability that the Fed will cut its target range\u00a0at least twice\u00a0by the December 11 meeting, including a 31% probability of\u00a0three cuts\u00a0by then, and a 10% probability of\u00a0four cuts, as implied by trading of 30-day Fed Fund futures.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">This chart shows how three rate cuts suddenly gained momentum among Fed Funds futures traders on the CME, though tapering a tad over the past two days (chart via I<a href=\"https:\/\/www.investing.com\/central-banks\/fed-rate-monitor\" target=\"_blank\" rel=\"noreferrer noopener\">nvesting.com<\/a>):<\/p>\n\n\n\n<figure class=\"wp-block-image\"><img decoding=\"async\" src=\"https:\/\/wolfstreet.com\/wp-content\/uploads\/2019\/06\/US-Fed-3-rate-cut-probability-2019-06-11.png\" alt=\"\" class=\"wp-image-51409\"\/><\/figure>\n\n\n\n<p class=\"wp-block-paragraph\">Anytime the rate-cut mongers on Wall Street can twist something a Fed governor says into a rate-cut projection, they will. For example, Fed chair Jerome Powell gave a&nbsp;<a href=\"https:\/\/www.federalreserve.gov\/newsevents\/speech\/powell20190604a.htm\" target=\"_blank\" rel=\"noreferrer noopener\">speech<\/a>&nbsp;on June 4 about long-term questions the Fed has been mulling over. The speech was unrelated to what the Fed will do over the next few meetings. Out of context, he shoehorned this line \u2013 \u201cwe will act as appropriate to sustain the expansion\u201d \u2013 into the beginning.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">&nbsp;\u2026click on the above link to read the rest of the article\u2026<\/p>\n","protected":false},"excerpt":{"rendered":"<p>\u201cThe Market is Almost Always Wrong About What the Fed Will Do\u201d: Chart The rate cuts for 2019 are a pipe-dream: Goldman Sachs and Deutsche Bank. It now makes two: The chief economists at investment banks Goldman Sachs and Deutsche Bank have warned their clients that the already priced-in rate cuts this year that markets [&hellip;]<\/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":[303,1849,534],"class_list":["post-46617","post","type-post","status-publish","format-standard","hentry","category-economics","tag-fed","tag-financial-markets","tag-monetary-policy"],"_links":{"self":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/46617","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=46617"}],"version-history":[{"count":1,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/46617\/revisions"}],"predecessor-version":[{"id":46618,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/46617\/revisions\/46618"}],"wp:attachment":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=46617"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=46617"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=46617"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}