FOMC: Don’t expect fireworks today, Fed may hold its fire till December – Rabobank

FXStreet (Delhi) – Michael Every, Research Analyst at Rabobank, suggests that he is not expecting any move today, with our Fed watcher Philip Marey still sticking to his long-held view that December presents a more likely date.

Key Quotes

“Global markets will be on tenterhooks ahead of the key decision over whether we get to see the first Fed rate hike since mid-2006 or not. For some in the market this could be the first time they will have ever seen the US actually raise rates; that, and the fact that markets are so obviously hyper-ventilating over the prospect of a mere 25bp hike, should speak volumes about the underlying state of the global economy at present.”

“Yesterday’s CPI print came in -0.1% m-o-m and 0.2% y-o-y, with even core CPI up just 1.8% y-o-y vs. 1.9% expected. Likewise this week we’ve seen retail sales of only 2.2% y-o-y (vs. 4.7% in November last year); industrial production at a limp 0.9% y-o-y (again vs. 4.7% in November); and we already know that the widest measure of unemployment is still at a worrying 10.3% and average earnings growth at only 2.2% (and even that not evenly distributed between professions).”

“In short, if the Fed do opt to ‘go’, the recent sell-off in longer dated Treasuries (US 10-year yields at 2.29% at time of writing) does not seem likely to last for long, with a flatter, rather than steeper, curve arguably more likely.”