Replies to post #70398 on Abet Chichi2 (Chichi2)

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~~Happy Sweethearts Day Friend!~~



GOD Bless You and All you do!

Take Care....

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$LYSCF Lynas Corporation Limited, together with its subsidiaries, engages in the exploration, development, mining, and processing of rare earth minerals in Australia and Malaysia. The company holds interest in the Mount Weld project in Western Australia. It also owns and operates Lynas advanced materials plant located in Malaysia; and Mt. Weld concentration plant located in Western Australia. The company is headquartered in Kuantan, Malaysia.

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~~~ The Fed Has An Itchy Trigger Finger ~~~

* March 3, 2017

Despite somewhat mixed economic data, Fed officials are clearly prepping investors for a rate hike on March 15.



Fed Governor Lael Brainard is the latest official to signal that a rate hike in mid-March has a high probability. What makes Brainard’s hawkish comments particularly noteworthy is that she is well known to have very dovish leanings. She joins Fed Presidents Dudley and Williams, who also raised the prospect of raising rates this month earlier in the week.

The sudden hawkish shift to the Fed’s rhetoric is somewhat at odds with the recent data, which do not call for any increased urgency to raise interest rates. Although the core PCE deflator rose 0.3% m/m in January, our diffusion index fell below zero. This means that the price gains were narrow and it would not be a surprise to see softer price increases in the next few months. Moreover, the annual core PCE inflation rate remained steady at 1.7%, still below the Fed’s 2% target. Meanwhile, a divergence between the “hard” activity data and the “soft” survey data persists. Reflecting the former, real consumer spending contracted in January. Consequently, the Atlanta Fed’s GDPNow model slashed its Q1 growth forecast to just 1.8%. However, the ISM manufacturing survey rose to a boom-like 57.7 in February.

Nevertheless, in light of the recent Fed commentaries, our U.S. bond strategists now believe that a rate hike in March has a high likelihood. It will take a very dovish speech by Fed Chair Janet Yellen tomorrow or a very weak nonfarm payrolls report next Friday to stay the Fed’s hand on March 15.

The U.S. equity market has shrugged off the Fed’s hawkishness. It seems that investors see accelerated rate hikes as a confirmation that the economy is strong. Whether this interpretation is correct or not, investors should keep a close eye on the yield curve. A renewed flattening trend will warn that growth expectations are being marked down, which will make lofty equity valuations more difficult to sustain.

https://blog.bcaresearch.com/the-fed-has-an-itchy-trigger-finger

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<<< The Fed’s “Unhike” >>>
By BCA Research | March 17, 2017

Financial assets rallied, while the dollar declined in the aftermath of yesterday’s FOMC meeting. This resulted in an easing in financial conditions, making the Fed’s actions an “unhike” of sorts.



The FOMC meeting produced a number dovish surprises. First, the median Fed forecasts still calls for three hikes this year instead of four, as some observers had anticipated. Second, the estimate for the structural rate of unemployment was scaled down further by a tenth of a percentage point to 4.7%. Third, the FOMC statement said that the Fed was looking for a “sustained” return to 2% inflation, while also referring to its inflation target as a “symmetric” one. Fourth, Minneapolis Fed President Kashkari dissented in favor of keeping rates unchanged, which few people had expected.

Having said all this, the market’s reaction still seems rather excessive. The key message from the March meeting was that the Fed now sees inflation as having essentially reached its 2% target. This was reflected in the decision to strip the reference to the “current shortfall of inflation” from the statement. As far as the reference to the Fed’s “symmetric” target is concerned, this is something that Chair Yellen and other FOMC officials have stressed many times before. All it means is that the Fed will not react too aggressively if core inflation were to drift somewhat above 2%. It does not mean that the Fed will purposely try to engineer an inflation overshoot. If it had wanted to do that, it would have lifted its 2019 inflation forecast. It didn’t do that; it remains stuck at 2%.

Why then did the FOMC bothered massaging the language? The answer is that the Fed was probably worried about destabilizing markets. After all, investors were pricing in only a small probability of a March hike just a few weeks ago. A “hawkish hike” could have caused markets to rethink their view that the Fed will “take it slow”. However, now that financial conditions have eased sharply in response to the FOMC’s decision, it is likely that Fed speeches will lean in a more hawkish direction over the coming weeks if the economic data come in firm. Our bond strategists recommend maintaining a below-benchmark duration stance.

https://blog.bcaresearch.com/the-feds-unhike

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