12 Dec 2014
US: Considering ‘considerable’ – ING
FXStreet (Barcelona) - The Team at ING notes that the main interest this week will be the FOMC policy announcement, with the markets focusing on whether Fed will show confidence in the recovery story and remove the “considerable period” phrase.
Key Quotes
“The main interest this week will be the FOMC policy announcement and associated forecast update and press conference. While no policy changes are expected given that the taper has concluded and the Fed is no longer formally expanding its balance sheet, markets will be focused on whether the Fed is confident enough in the recovery story that it removes the “considerable period” phrase. This is the description regarding how long interest rates will remain on hold after the QE programme conclusion, which happened in October.”
“The labour market is clearly strengthening and the activity data looks in good shape. However, inflation is very benign thanks to the plunge in energy costs and the Atlanta Fed’s Dennis Lockhart has suggested the Fed is in “no rush” to remove “considerable period”. This phrase has been interpreted as meaning “around six months” so if we do see an amendment to the language Fed Chair Janet Yellen is likely to emphasise that rate hikes are not imminent in order to limit the upside risk for short-dated Treasury yields.”
“The main US data will be inflation readings, which will be depressed by the plunge in oil prices translating into lower gasoline prices. Meanwhile, strong ISM manufacturing numbers impliy that manufacturing and industrial production growth should be robust.”
Key Quotes
“The main interest this week will be the FOMC policy announcement and associated forecast update and press conference. While no policy changes are expected given that the taper has concluded and the Fed is no longer formally expanding its balance sheet, markets will be focused on whether the Fed is confident enough in the recovery story that it removes the “considerable period” phrase. This is the description regarding how long interest rates will remain on hold after the QE programme conclusion, which happened in October.”
“The labour market is clearly strengthening and the activity data looks in good shape. However, inflation is very benign thanks to the plunge in energy costs and the Atlanta Fed’s Dennis Lockhart has suggested the Fed is in “no rush” to remove “considerable period”. This phrase has been interpreted as meaning “around six months” so if we do see an amendment to the language Fed Chair Janet Yellen is likely to emphasise that rate hikes are not imminent in order to limit the upside risk for short-dated Treasury yields.”
“The main US data will be inflation readings, which will be depressed by the plunge in oil prices translating into lower gasoline prices. Meanwhile, strong ISM manufacturing numbers impliy that manufacturing and industrial production growth should be robust.”