Rob.Reynolds

UPDATE: S&P 500 is 1% away from target, Fed are a risk.

FX:SPX500   S&P 500 Index
I believe a hawkish Fed will be a policy error but it will help regarding trade negotiations.
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There won't be any rate hikes today, because the US Federal Reserve follows the US treasury bill rates set by the market. That is, the markets sets the treasury bill rate and the federal reserve sets their rate based on the treasury bill rate. Federal reserve follows the market. As the treasury bill rates is moving sideways, there will not be a rate hike regardless of what financial experts say.
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@gvoommen,

100% agree George, I had this discussion below with @giltwenty. Probability rate staying at 2.25-2.5% is 97% today. This is not what will move the market, its the rhetoric.

Right into December, we have a >70% probability that rates stay between 2.25-2.5%, with 0% probability of a hike. If the rhetoric is hawkish the markets will discount that.

None the less, I agree, no hike!
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Rob, Is bill dudley not the former member for New york?

There will certainly be a selloff if rates are raised. Interestingly when that news came out from around the 6th of march we had that rapid selloff only to be bought up again. I don't think Powell will surprise the markets here. Forecasts are for no change, but an easy play for traders out there either way. It seems we have a little sell off today as traders hedge their bets pre announcement of rates.

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@giltwenty,

You're right, Bill Dudley is no longer part of the FOMC but if there is anything I learned from Larry Summers its that once a Fed member, always a Fed member.

This comment from Monday, 18th that just past.

"I think what is going to happen is we are going to have a pretty weak first quarter, and that’s going to cause the Fed to wait for even more information,” the former New York Fed President said during a Bloomberg TV interview with Scarlet Fu and Caroline Hyde.

"But if the economy picks up speed again, as I expect will happen, and inflation starts to drift higher" as Morgan Stanley predicted it will last week "then the Fed will be back in play, maybe as early as the second half of this year," Dudley said

https://www.zerohedge.com/news/2019-03-18/bill-dudley-says-fed-hikes-may-be-back-play-soon-second-half-2019

The market is a discounting mechanism, the Fed doesn't need to raise rates, they only need to have the intent and the market will discount that. I see it unlikely that we have a hike but don't rule out a hawkish overtone. Although PPI is weak due to PMI's, the pop is commodities especially Crude Oil will cause transitory inflation at the very least! (Crude Oil YoY is = CPI YoY)
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giltwenty Rob.Reynolds
@Rob.Reynolds, Ah true. Well if the tone if hawkish we may not make a new all time high. I don't think the markets will sell off with just hawkish overtone though. Last year we had forecasted rate hikes for all year and the market didn't crash until the last rate hike. We had immediate sell offs after every single hike and the bulls bought the dips to push to an all time high with good economic data. This year I think the bulls will buy the non rate hikes and sell the bad data or sell with bad trade news. As you said previously and forecasted very well the Fed put is in now and the likelihood of them changing that is very small. I think we can expect to be long all year until the pmi's show contraction due to last years hikes.. But you could be right.. humility is key in the markets!
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@giltwenty, it depends on what's priced into the curve.

For today there is a 97% (87% for July & 79.2% for September) probability that Fed Funds remains at 2.25-2.5%.

If the Fed are hawkish today the market is not expecting it and thus a sell-off is likely!
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giltwenty Rob.Reynolds
@Rob.Reynolds, cheers mate!
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You're very welcome @giltwenty, have a great day!
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Watching todays 1 DAY candle with interest, his is my idea, kind of educated guess, I follow oil/gold/silver shares and the oil shares look maxed out / silver close to breakout long
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