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14 May 2015
Fed looks for clarity - MP
FXStreet (Barcelona) - With markets pushing back US rate hike expectations, Dean Popplewell, VP of Currency Analysis and Research at MarketPulse notes the data dependent Fed gives little choice to the central bank but to wait for further clarity.
Key Quotes
“The Fed has its problems. They want to raise rates, but the timing is crucial, as too soon could unwind all the good that would require them to back peddle. Yellen and her fellow cohorts are trying to justify their next move on the back of Q1 “transitory” blip.”
“Yesterday’s U.S retail sales number was a bust and a big disappointment to those who are banking on a Q2 rebound in consumption. The drop in year-over-year energy prices (tax saving), higher savings and a stronger labor market (+5.4% unemployment rate) has yet to convince the U.S consumer to spend.”
“The Fed’s normalization rate time line is data dependent, but the latest batch of economic releases are very much mixed and are accompanied with quiet a bit of market noise. This would suggest that recent asset price moves are not wholly fundamentally drive.”
“The stretch positions taken of late are led mostly by fear and liquidity constraints, whether it’s in the fixed income, commodities or forex asset class. The Fed’s data dependency motive gives them little choice but to wait for such clarity. Hence why U.S fixed income is looking further out their curve for the first rate hikes.”
“Some dealers are leaning towards September, but current data would suggest that the Fed has time on their side. This is allowing others to push back Fed rate hike expectations into next year.”
Key Quotes
“The Fed has its problems. They want to raise rates, but the timing is crucial, as too soon could unwind all the good that would require them to back peddle. Yellen and her fellow cohorts are trying to justify their next move on the back of Q1 “transitory” blip.”
“Yesterday’s U.S retail sales number was a bust and a big disappointment to those who are banking on a Q2 rebound in consumption. The drop in year-over-year energy prices (tax saving), higher savings and a stronger labor market (+5.4% unemployment rate) has yet to convince the U.S consumer to spend.”
“The Fed’s normalization rate time line is data dependent, but the latest batch of economic releases are very much mixed and are accompanied with quiet a bit of market noise. This would suggest that recent asset price moves are not wholly fundamentally drive.”
“The stretch positions taken of late are led mostly by fear and liquidity constraints, whether it’s in the fixed income, commodities or forex asset class. The Fed’s data dependency motive gives them little choice but to wait for such clarity. Hence why U.S fixed income is looking further out their curve for the first rate hikes.”
“Some dealers are leaning towards September, but current data would suggest that the Fed has time on their side. This is allowing others to push back Fed rate hike expectations into next year.”