If you enjoy deciphering what Fed officials have to say, you are going to love today as no fewer than six members of the Fed are scheduled to speak on this fine Friday.
James Bullard, who seems to have a comment each and every day lately, kicked things off early this morning by saying that, in his opinion, it is time for a rate hike but that the real question is what the path for 2017 is going to look like. This after Janet Yellen, testifying in front of Congress yesterday, gave us the strongest indication yet that her FOMC appears to be ready to hike rates again in December.
In addition, we will hear from Kansas City Fed President Esther George, Dallas President Robert Kaplan, New York’s Dudley, Chicago’s Evans, and Fed Governor Jerome Powell. As such, if the market appears to move quickly in either direction today, you can likely attribute the move to some new Fedspeak and move on with your day.
Running counter to U.S. policy are comments this morning from Mario Draghi, who suggested that QE is going to be an important part of their stimulative measures – at least until inflation reaches acceptable and sustainable levels. The divergent monetary policy in the U.S. is causing the dollar to continue to rise, gold to fall, and interest rates to keep on keepin’ on.
Speaking of bond yields, this remains an important area to watch as rates have made an historic move since July, leaving many to wonder if the big, bad bond bear has begun. We believe the current move in rates is likely closer to ending than beginning and that we would need to see actual improvement in economic growth, sustained inflation, and an actual fiscal policy before anything really big can happen in bonds. But we will continue to monitor this situation closely.
Current Market Drivers
We strive to identify the driving forces behind the market action on a daily basis. The thinking is that if we can both identify and understand why stocks are doing what they are doing on a short-term basis; we are not likely to be surprised/blind-sided by a big move. Listed below are what we believe to be the driving forces of the current market (Listed in order of importance).
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