After a Monday speech by Boston Federal Reserve Bank President Eric Rosengren raised the possibility that Wall Street has mis-interpreted the Fed’s plans on interest rates, the markets are looking to the release tomorrow of minutes from the Fed’s March 16 meeting for reassurance. Could it be that the Federal Reserve will implement its next interest rate increase sooner than is now expected?
Ah, yes, volatility. The S&P 500 was down 12% for the year by mid-February. The index finished the quarter up 0.9% (as of 2:30 p.m. New York time today) after a 6.9% rally in March. Global stocks were up 7.1% in March but finished the quarter down 0.3%. Shanghai stocks rose 12% in March to cut the loss for the year to a mere 15%
At a speech in front of the Economic Club of New York today Federal Reserve Chair Janet Yellen pretty much quashed speculation that the Fed might raise interest rates at its April meeting. After such a strong reiteration of the Fed’s willingness to wait, the dollar fell, retreating 0.02% against the euro, and oil climbed
In the morning the U.S. dollar looked to be headed to a seventh day of gains, which would be the longest rally in the dollar since October. But while it finished up against the yen, it fell for the day against most major currencies
Now it’s Patrick Harker, president of the Philadelphia Fed, urging the Fed to “get on with” interest rate increases in April and joining the comments of two other Fed heads
Is the possibility of an interest rate increase at the Federal Reserve’s April 27 meeting back on the table?The markets say “No way, Janet.” The futures market gives an April increase just 8% odds.
On one side there are those no believe nothing fundamental changed with the Federal Reserve’s meeting. The other group believes that the Fed is now back in alignment with the easy money group
I was looking for the Federal Reserve to signal three rate increases in 2016 with the first in June. That would have been down from the four increases they had signaled in December. Instead Janet Yellen & Co. pointed toward just two interest rate increases in 2016.
