Tag: Federal Reserve Chair Janet Yellen

Fed Watch: December Rate Hike Likely Based on Fed Official's Language

Posted on by Matt Thalman

Matt Thalman - INO.com Contributor - ETFs


Over the past few weeks, the likelihood of a December rate hike by the Federal Reserve Bank has grown substantially. Both economic data and hints from a number of Federal Reserve policymakers now point towards a December rate hike and now on Wall Street 70% of investors polled believe a rate hike in December is possible. So let us take a look at the data and what Fed officials are saying that is making investors believe a hike is coming.

Data

One of the most compelling data points is the October jobs number. Expected to come in at 185,000, but blew that figure out of the water when actually coming in at 271,000. The unemployment rate fell to 5%, from 5.1% and average hourly earnings rose 0.4% for the month. Furthermore, the increase in pay on a year-over-year basis was 2.5%, the highest increase the jobs market has seen since July 2009. Continue reading "Fed Watch: December Rate Hike Likely Based on Fed Official's Language" →

Poll: U.S. Hiring Surges In October Pushing Unemployment Down To 5%

Posted on by The INO.com Team

U.S. hiring roared back in October after two disappointing months as employers added 271,000 jobs, the most since December. The unemployment rate fell to a fresh seven-year low of 5%.

Companies shrugged off slower overseas growth and a weak U.S manufacturing sector to add jobs across a range of industries. Big gains occurred in construction, health care and retail. Healthy consumer spending is supporting strong job gains even as factory payrolls were flat and oil and gas drillers cut jobs.

The gains are likely strong enough for the Federal Reserve to lift short-term interest rates at its next meeting in mid-December.

Robust hiring also pushed up wages 9 cents to $25.20. That is 2.5% higher than 12 months ago, the largest annual gain since July 2009.

Based on this data:

Do you think the Fed will raise interest rates in December?

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Every Success,
Jeremy Lutz
INO.com and MarketClub.com

No Fed Rate Hike Good For Gold, Bad Sign For Economy

Posted on by admin

The much-anticipated decision by the Federal Reserve Board at the Sept. 17 meeting to hold interest rates near zero was met in the resource community with a mixture of relief and disappointment. The 9-to-1 vote citing global economic pressure on inflation left open the possibility of a hike at the December meeting. The Gold Report asked the experts in the resource sector what this means for precious metals and oil prices, and what signs they are looking for that a different outcome will be announced in December.

Fed announcement

Joe McAlinden, founder of McAlinden Research Partners and former chief global strategist with Morgan Stanley Investment Management, was disappointed that the Fed "blinked." He called the decision irresponsible and attributed it to worries about China's growth. The veteran investor saw the status quo as bullish for precious metals and oil, but warned, "As the Fed continues to postpone moving towards normalization of interest rates, the potential for future inflation from years of excessive stimulation increases with every delay of the end of the zero interest rate policy."

He continued, "Based on today's decision, we now need to watch economic data from China and the performance of the markets themselves. I do not believe that the Fed's focus on those points is appropriate. Nonetheless, it is now clear that these will influence the timing of the next Fed move. Also, and more appropriately, we should be watching average hourly earnings, overall signs of strength or weakness in the U.S. economy, and the trend of the core PCE deflator." Continue reading "No Fed Rate Hike Good For Gold, Bad Sign For Economy" →

How Many Rate Hikes Can The U.S. Handle?

Posted on by Lior Alkalay

Lior Alkalay - INO.com Contributor - Forex


The FOMC meeting ended yesterday as many had expected. Besides some marginal tweaks in the language, the message remained the same; data will determine our rate policy. Now, hours after the latest US GDP figures hit the newswires, it seems that Dollar Bulls are gearing up towards a September rate hike. Part of their rationale is because the data is good enough to sustain a rate hike. And that’s essentially true. With wages growing annually at 2%, Core Inflation at 1.7%, unemployment at 1.8% and now GDP bouncing back, indeed, a rate hike is warranted. At the same time, there are essentially no signs that the US economy is overheating. Rather, we’re seeing notable signs of stabilization. This, then, begs the question: How many rate hikes can the US handle in the upcoming year?

No Escape Velocity in GDP

When we examine the dynamics of GDP growth, it’s evident that the US GDP growth rate is not breaking the range. Instead, it has the same cycles that tend to end around the 3% growth rate. After that, the US economy tends to decelerate, only to regain momentum later. But this range of growth has not been broken. This means that there’s no evidence that US GDP is at escape velocity, a pace which would require several rate hikes a year.

United States GDP Annual Growth Rate
Chart courtesy of Tradingeconomics.com

No Escape Velocity in Inflation

When we examine US Core Inflation, a similar picture emerges. US inflation is within the Fed’s 2% range and is showing no signs of overheating, i.e. escaping the Fed’s target. Rather, every time it reaches the 2% range, it tends to cool and then slide slightly lower. Continue reading "How Many Rate Hikes Can The U.S. Handle?" →

I'm Still Not Sold On A 2015 Rate Increase

Posted on by George Yacik

George Yacik - INO.com Contributor - Fed & Interest Rates


The consensus market opinion after last week's Federal Reserve monetary policy meeting is that the Fed will start to raise short-term interest rates sometime this year, maybe twice, beginning most likely at its September meeting.

I, for one, am still not sold that that will happen.

Last Wednesday's announcement following the Federal Open Market Committee meeting said not much of anything, especially when it came to signaling when it might finally begin interest rate lift-off. The statement gave the usual yadda yadda that economic activity "has been expanding moderately" and that "the pace of job gains picked up." But nothing about rates, other than the usual verbiage that the current federal funds target range of zero to 0.25% "remains appropriate."

Instead, analysts, journalists and investors were forced to look for clues in the "Fed dots," which show graphically where the 17 individual FOMC members expect interest rates to be by the end of this year, next year, 2017 and beyond. Continue reading "I'm Still Not Sold On A 2015 Rate Increase" →