Michael Darda
Michael Darda
change data economic expected fed funds interest minutes moves outlook raise rate released unless
The minutes didn't change the outlook for the interest rate moves priced into the market. The Fed is expected to raise the funds rate at least two more times unless economic data is released that will change this assumption.
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Such action could create a sharp upward move in inflation expectations, additional upward pressure on precious metals prices and renewed downward pressure on the dollar, ... If that were to happen, the Fed likely would have to drive rates up much more in the future, which could be disruptive to financial markets.
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The market is higher, but we're not talking huge moves here. The market is looking at a plateau in the fed funds rate at or around 5%.
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Essentially, he's saying that they may pause around 5 percent after the May meeting.
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A significant part of demand right now is based on speculation that something is going to happen in the future or near future to make supplies much more scarce.
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There's no real change in the rhetoric. He's talking about risks to economic growth, but within the overall context that monetary policy can respond.
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It doesn't look like what happened with GDP in the fourth quarter is a harbinger of the future.
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I think he's basically greasing the skids for the Fed to keep raising rates, and that may not be something the stock market has realized yet, ... and that's why you're not seeing much reaction.
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You just can't have 30 percent growth every quarter.
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Today's number is a sign of slowing ahead. But that's not a negative thing. With the dramatic price appreciation we've seen, we don't want to see a runaway market out of control.
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If we get anywhere close to the forecast, its going to be negative for bonds, cause that market has depended on a miss on payrolls in recent months.
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The bond market is at a ridiculous valuation, whereas the stock valuation is low relative to bonds.
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To me, this looks like continuation of crude oil escaping the gravity of reality.
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They seemed to reassure the market that the economy was OK after the hurricanes, but overall, I don't think there's anything new, and that's why the stock and bond reaction has been muted.