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Trading Radar: FOMC Meeting is Key Catalyst Next Week
By Michael Sedacca Sep 12, 2014 4:32 pm
Economics, earnings reports, and market events for the week ahead.

Most forecasters think there is a better than even money chance that the Fed strikes a hawkish tone by removing its pledge to keep interest rates near zero for a considerable time after asset purchases end next October. Additionally, the 2017 economic projections will be released which include the Fed funds projections from the various members. It is also possible that the Fed lowers its long-run projections while forecasting a rate of around 3.25% at the end of 2017, signaling that the tightening cycle would end around then.

However, I do not think that the Fed will go down this path. There is a deflation pulse in the market that is saying if the Fed does begin to pull forward the first rate hike then, well, bad things will happen. As my friend Neil Azous of Rareview Macro argues, the Fed has not even completed its asset purchase program, so it does not make sense to drop the considerable time phrase from the statement and box the FOMC into a corner. Thus, I think that the Fed will do less than market participants think, which would be a dovish signal.

Read more: http://www.minyanville.com/business-news/markets/articles/economic-data-fed-meeting-janet-yellen/9/12/2014/id/55729#ixzz3DCNIfUGC