Voting member Lael Brainard maintained her mildly dovish stance, with the headline quotye being "case to tighten policy preemptively is less compelling" perhaps the most indicative of the dovish sentiment. The rest of the comments remained neutral-downbeat and didnt echo JPM's CEO's comments of "A 25-basis-point increase is a drop in the bucket," and Let's just raise rates. You don't want to be behind the eight ball on this one, and I think it's time to raise rates.".
Likely to have little effect on the overall decision and hawks imo are a lost cause here, eyeing the 20% of hikes priced into USD downside seems much more realistic than speculating on the tail-end possibility that the Fed rise rates. As posted earlier I maintain my view that yen shorts above 100 are valid, and GBPUSD longs to 1.34/5 also fall in line and will likely be reached on a fed no hike. Cross asset wise I still maintain my broad view of SPX towards 2000 and gold towards 1400. I think DXY has 92 potential on a fed no hike. On the note, Fed funds have sold off somewhat from 24% implied sept hike to 15% presently, this has helped buoy risk markets with SPX up 0.7% and nasdaq outperforming up 1.28%.
Brainard speech highlights:
Fed's Brainard: Case to Tighten Policy Preemptively Is Less Compelling Brainard: Effect on Inflation of Further Labor Market Gains Likely To Be Moderate, Gradual Brainard: Natural Rate of Unemployment Could Move Even Lower Brainard: More Concerned About Undershooting Than Overshooting on Inflation Brainard: Phillips Curve Appears Flatter Today Than Previously Brainard: Asymmetry in Risk Management Counsels Prudence in Removing Policy Accommodation Brainard: Japan, Eurozone Experience Suggests Prolonged Weakness in Demand Very Difficult to Correct Brainard: Labor Market Developments May Imply Room for Further Improvement Brainard: Progress Toward Full Employment Likely to be Somewhat Gradual Brainard: Raising Inflation Target, Nominal Income Target, Negative Rates Merit Further Study Brainard: Better to Tilt Policy Against Downside Risks Than to Raise Rates Preemptively Brainard: Low Neutral Rate Means Current Policy Rate Less Accommodative Than Previously Brainard: Chinese Growth Likely to Continue to Slow, Downshift Could Pose Risks Brainard: Disinflation Pressure, Weak Foreign Demand Likely to Weigh On Outlook Brainard: Spillover from Adverse Foreign Shocks More Powerful Than Previously Brainard: Japan Example Highlights Risk of Low-Growth, Low-Inflation Environment Brainard: Fed Policy Should Minimize Risk of U.S. Slipping Into Such a Situation Brainard: US Should Avoid Situation of 'Trapped' Japan, Eurozone Fed's Brainard: May Be Additional Slack In Labor Market Brainard: Given Low Inflation Pressure, There Is Space To Continue Reducing Slack Brainard: Still Room For Drawing Prime-Age Labor Force Back To Work
DXY would reach 92 if Fed don't hike in Sep? Hike prob is already down to 15% though
QuantumLogicTrading
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We was only there back in May when fears of only one hike were around.. when one hike is actually a reality (e.g. sept no hike) i think we will move to 92. Fed funds apparently arent pricing what the broad market actually thinks.. someone showed me one funds that has it closer to 40-50%, but even so, i can see USD losing 2% on a no hike, throw in election too.. I think a sept no go could see a run on december too, if they dont go in sept then dec might not even be possible data hasnt shown any consistency for the last 9 months, so on that basis, i cant see it showing any for the next 3 either.
Exercise-Discipline
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fair enough, do you think your SPX short trade is still valid?
QuantumLogicTrading
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yup Ive been short from 2182 avg since mid august when i initially posted and will hold until we move to 2000.. Brainard didnt help but its inevitable to move lower at some point, now or in 6 months time.