Author: Eamonn Sheridan

Here's an interesting weekend read arguing that the stock market correction makes a September Federal Reserve hike "more compelling", not less.

  • "because it gives Fed Chair Janet Yellen the opportunity she needs to kill the "Greenspan put" once and for all"

The argument made is that extraordinarily low interest rates for an extremely long time breeds a complacent belief that the Fed is guaranteeing equities and bonds ... a belief the Fed wants to dispel.

  • The point of easy monetary policy isn't to goose the stock market as an end unto itself ... The Fed wants businesses to invest in the future, which means investors need to put their money into productive investments instead of riskless Treasuries

(And, by extension, a complacent belief in 'riskless' equities)

More at the article

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In (very) brief, the 'Greenspan put' (or the 'Bernanke put', or, more generally, the 'Fed put') is the belief that the Federal Reserve will lower the Fed Funds interest rate if the stock market drops, thereby encouraging a movement out of fixed interest instruments into equities, and providing the stock market with a boost.

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OK ... I think the argument has a lot going for it. But, I'd be concerned about putting too much trust in the bravery of the Federal Reserve to just go ahead and do it. St. Louis Fed President James Bullard has even told Reuters the Committee would be hesitant to hike if global markets continued to be volatile in mid-September.            

Which rather sounds like not wanting to end the Fed Put at all, yeah?

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Author: Adam Button
1

ForexLive Americas FX news wrap: Fisching for hawkish comments

Forex news for US trading on August 28, 2015: - Lockhart: Markets make him less resolute on rate hike - Gold up $10 to $1134 - S&P 500 up 1 point to 1989, up 0.9% on the week The main event was the appearance from Fischer on CNBC. He was more hawkish than expected and that led to some US dollar strength and an initial wave of stock market selling that was later mitigated.

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Author: Adam Button
1

SNB's Jordan: Swiss franc significantly overvalued, stands ready to intervene

The usual from Jordan in the text of his Jackson Hole speech - Aim of SNB's policy of negative rates, willingness to intervene in FX market, is to weaken franc over time Central bankers love to point to inflation expectations but for the past 20 years the BOJ has missed its target and inflation expectations remained high throughout.

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Author: Adam Button
1

CFTC commitments of traders: Yen shorts chased out

CFTC commitments of trader data released August 28, 2015: - EUR shorts 96K vs 93K short prior week - GBP 4K vs 4K short prior week - JPY short 39k vs 90k short prior week The major move was in yen shorts as they were obliterated in the spike lower on Monday.

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Author: Adam Button
3

This was the last place anyone expected to see a bull market

Oil gains 20% since Monday The bigger the fall, the harder the squeeze. Crude oil is up 20% from the lows on Monday, matching the technical definition of a bull market. The vast majority of the gains came in an epic short squeeze over the past two days.

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Author: Adam Button
2

Earthquake shakes buildings in Lima, Peru

 Witnesses in Lima report buildings shaking - RTRS Initial reports from the USGS suggest a magnitude 5.0 earthquake, which isn't likely to cause any significant damage.

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Author: Adam Button
1

Fed's Lockhart: 50/50 chance of a Sept Fed hike is 'reasonable'

Lockhart speaking with CNBC: - Open question on whether we move now or wait 'a little' - Must take into account lower oil prices, higher US dollar and market move ahead of Sept meeting At the beginning of the month he said there was a high bar for not deciding to hike rates.

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Author: Adam Button
3

Stocks bounce right back

Just like that the equity market is back near unchanged The US dollar seems to move slightly ahead of the these changes in sentiment. I'm skeptical of any move until the last tick of the day.

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Author: Adam Button
3

Fed hike probability rises after comments from Fed's Fischer

Could Fischer have misdiagnosed the causes of volatility and invited a tug-of-war with markets? The implied probability of a September hike in Fed funds futures has risen to 38% from 30% earlier today and 22% earlier this week.

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Author: Adam Button

Fed comments don't rattle USD/JPY as it clears 61.8% retracement

USD/JPY touches 121.50 USD/JPY is up 40 pips on the day and cleared 121.50 in the latest push. The gains have come today despite mixed sentiment in stocks and dovish Fed comments. That's a great sign of underlying demand but it could be skewed by weekly and month-end flows.

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Author: Adam Button

Baker Hughes US oil rig count 675 vs 674 prior

US oil and gas drilling rigs from Baker Hughes: - Baker Hughes US oil rig count 675 - Natural gas rig count 202 vs 211 prior - Total count 877 vs 885 prior Oil isn't exactly moving on fundamental news at the moment.

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Author: Adam Button
5

Fed's Lockhart: Markets make him less resolute on rate hike

Lockhart speaking with MNI: - His policy thinking may change on market turmoil assessment - Preference for timing not reason for Sept dissent - Economy in 'quite solid' mode of expansion Lockhart was a guns-a-blazin' hawk and now he's backing down.

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Author: Adam Button
5

Fed's Fischer puts a September Fed hike back on the table

Hawkish comments from Fed Vice-Chair Stanley Fischer The US dollar is catching a bid and stocks are coming under mild pressure after Stanley Fischer appeared on CNBC and delivered a few .

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Author: Ryan Littlestone
6

EURUSD dives below 1.1200 as USDJPY rises. It smells of end of month

Fischer waffle might be fingered for the moves but I earlier mentioned end of month dollar demand vs euro I've not had any confirmation yet but to see EURUSD dive late in the day while USDJPY rises as all other dollar pairs stay more or less stable, suggests flows out of the euro

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Author: Greg Michalowski
1

USDCAD takes a fall as crude oil rises

Oct Crude oil futures up 4.1% The October crude oil futures are up 4.1% in trading today (Oct is transitioning to the front contract month now) to 44.40 area. The price moved above a downward sloping trend line yesterday (see chart below).  The contract traded as low as 37.75 on Monday.  The rebound is a healthy 17.6% from the low. Of course, the price has fallen from 64.74 since May. So there is room to correct and still keep the "bearish figure" 

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Author: Ryan Littlestone
4

After wobbly week stocks are going to close up on the week

European stock market close 28 August 2015 - FTSE +0.5% day +0.6% week - Cac +0.1% day +0.7% week - Dax -0.4% day +1.7% week - Ibex +0.3% day +0.6% week - FTSE Mib -0.9% day +1.1% week European bonds

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Author: Adam Button
2

Fed's Fischer: Too early to tell for September rate hike

Comments from Federal Reserve Vice-Chair Stanley Fischer August 28: - Previous case for September liftoff was pretty strong - Previous case for Sept liftoff wasn't conclusive Hawkish comments from Fischer keep a rate hike on the table for September. The US dollar and stocks starting to feel some heat.

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