Markets Are in a Tizzy. So What Will the Fed Do?




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ORIGINAL POST

Posted by Ed 2 mths ago
Markets are in a tizzy. They’re finally reacting to the Fed’s rate-hike cycle, the slowest rate-hike cycle in history. It took three years to nudge up the effective federal funds rate from near zero to 2.40% now. Throughout, the Fed has communicated its goals of “removing accommodation” from the “financial conditions” in the markets — thus tightening “financial conditions” that had become loosey-goosey during years of zero-interest-rate policy and QE.

And suddenly, financial conditions in the markets started tightening in October. So let’s see where we are — and how this might impact the Fed’s decisions.

“Financial conditions” is a key term in the Fed’s official communications. For example, in the minutes from the November FOMC meeting, the most recent available, the term was used five times:

https://wolfstreet.com/2019/01/03/markets-are-in-a-tizzy-so-what-will-the-fed-do/

COMMENTS

Ed 2 mths ago
https://wolfstreet.com/wp-content/uploads/2019/01/US-financial-stress-index-2019-01-03.png


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