Tuesday, March 15, 2016

Will The Fed Raise Rates?

Hi Folks,

Here we are again awaiting the FED rate decision.  Do they raise again?  The Fed Funds Futures give a 0% probability of the FED raising rates on Wednesday.  http://www.cmegroup.com/trading/interest-rates/countdown-to-fomc.html.  In her most most recent banter, Janet Yellen has expressed that rate hikes will come but more slowly than previously expected.  I think the FED is exercising extreme caution here.  They have 2 mandates for their decisions, unemployment 5% and 2% inflation.  They have achieved the 2 targets for unemployment and inflation according to the most recent data so why not continue to raise?

They are looking at the weak global economic picture and the probability that it will infect the US economy.  As I have mentioned before, I believe it already has and will continue.  If they stick to what they have been preaching about economic recovery and hitting the 2 targets for unemployment and inflation, they should raise.  The problem is the FED doesn't really have those 2 mandates as their barometer, they care more about the impact of their decisions on the markets.  So I believe they will not raise tomorrow because it is not what is expected.  If they do raise, the market is going to rollover again sooner than later.  Either way, I think we rollover soon.  We hit my target for this upside move from the February 11th low on the button yesterday.  However the technical's say there could be more upside.  It will be interesting to see what happens tomorrow.

Thanks and Good Trading,