Watch This Part Of The Fed's Wednesday Statement
Good old Trichet times are back. Now we are going to measure if there is a comma or a semicolon in the sentence too and that will be the "sign" 
Investors banking on spring rate hike: Merrill survey
Investors are increasingly expecting the Federal Reserve to raise interest rates in the spring of 2015, with the dollar forecast to rise as a result, according to the Bank of America Merrill Lynch Fund Manager Survey for September.
Nearly half of the fund managers polled, 48%, believe the U.S. central bank will introduce what would be its first rate tightening in nine years in the second quarter of next year. That’s up from 38% last month. Against that backdrop, a net 86% of the respondents see the dollar strengthening further against the euro and yen.
“As the first Fed rate hike since 2006 draws closer, we’ll see a new U.S. dollar bull market and movement out of bonds,” said Michael Hartnett, chief investment strategist at B. of A. Merrill Lynch Global Research in the release.
The survey comes as the Fed gets ready to kick off a two-day policy meeting Tuesday, with fears the central bank could conclude the meeting by signaling a rate hike sooner than previously expected. Read: Eight keys to Fed’s September meeting.
Another key finding in the fund-manager survey was the stance on the European Central Bank and eurozone equities. Investors are increasing exposure to the region’s stock markets after the ECB at its September meeting again cut interest rates and said it would start buying asset-backed securities. A net 18% of the respondents are now overweight euro-area stocks, up from a net 13% a month ago. In addition, more of the panelists see the ECB embarking on a full-scale quantitative-easing program by the end of the year, with 42% believing in QE now, compared with 32% in August.
“While investors welcome the ECB’s actions, the region is still lacking its growth mojo. It will take time for growth to materialize from policy action, and there are no guarantees it will,” said Manish Kabra, European equity and quantitative strategist at Merrill Lynch.
Good old Trichet times are back. Now we are going to measure if there is a comma or a semicolon in the sentence too and that will be the "sign"
Wasn't it always so. They are looking for a reason to provoke a price change, that is all
Fed Decision Day Guide: Considerable Debate on Forward Guidance
Here’s what to look for when the Federal Open Market Committee releases its policy statement and new economic projections at 2 p.m. today in Washington and Federal Reserve Chair Janet Yellen holds a press conference at 2:30 p.m.
-- Still “considerable”? It’s shaping up as a close call. Thirty-two of 60 economists in a Bloomberg survey said the FOMC will stick to its pledge to keep its benchmark interest rate near zero for a “considerable time” after it finishes bond purchases.
Cutting that language could spook investors, said Lindsey Piegza, chief economist at Sterne Agee & Leach Inc. in Chicago. “One of the biggest concerns with removing that is that the markets will read it as a hawkish tilt,” she said.
The committee doesn’t need to drop the phrase immediately, because the end of bond purchases probably won’t come for at least another month. The FOMC today will probably announce that monthly purchases will be reduced by another $10 billion, to $15 billion, Maury Harris, chief economist at UBS Investment Bank in Stamford, Connecticut, said in a note to clients. Most analysts expect October will be the last month of the program, putting the FOMC on track to announce an end to it at the Oct. 28-29 meeting.
If the committee does cut the “considerable time” language, it may replace it with something intended to blunt the reaction. “In its place, the statement may say that given the FOMC’s economic outlook, policymakers could be ’patient’ in removing monetary accommodation,” said Joseph LaVorgna, chief U.S. economist at Deutsche Bank Securities in New York.
In similar circumstances in 2004, Alan Greenspan, the Fed chairman at the time, suggested the FOMC statement drop the words “considerable period” and substitute a reference to “patience.” His colleagues agreed and their post-meeting statement was adjusted accordingly.
Hilsenrath Backs Away From His "Considerable Time" Prediction
Yesterday's exuberant equity market reaction has been largely defined by the mainstream media as driven by WSJ Hilsenrath's 'confirmation' that Yellen will keep the uber-dovish phrase "considerable time" in the FOMC statement today. So, we wonder, why did the Fed-whisperer, after markets had closed last night, issue a quasi-retraction of his prediction explaining that instead of some prohetical "I just know" statement, it was a "best guess," as he concluded, "will the Fed take these steps? Only the people in the room know that. The rest of us will see Wednesday afternoon." It appears the sell-side disagrees with him on the language...
* * *In a webcast Tuesday, I explained why I thought the Federal Reserve would stick with, but qualify, an important phrase in its policy statement Wednesday which assures near-zero interest rates for a “considerable time.” This was simply my best analysis of where I think the Fed is going based on what we have been reporting and what officials have said in the past.
...
Here’s my analysis: Janet Yellen is a methodical individual and the Fed, in normal times, is a slow-moving institution. It takes time for debates to play out. Ms. Yellen is seeking consensus, as we reported earlier this week. The considerable time debate doesn’t feel ripened or fully aired. When Ms. Yellen has used the phrase in recent months she has qualified it, but not suggested changing it. Meantime the Fed has other business on its plate. The exit plan has been in the works for months, as has the plan to end bond buying. Changing the “considerable time” guidance now, while also announcing an exit plan, could be viewed by market participants as a surprising move toward raising rates.
Fed officials haven’t forgotten last year’s “taper tantrum,” when long-term interest rates shot up as they commenced discussions about winding down the bond program.
We reported earlier this week that Ms. Yellen, as Fed chairwoman, hasn’t behaved as the easy-money policy “dove” that many market participants expected. That doesn’t mean she’s suddenly a hawk. It just means she’s not a dove.
Ms. Yellen’s most logical next step, to my mind, would be to stick for the time being to what she’s been saying, which is that rates will stay low for a “considerable time” with the strong qualification that this could change if the job market keeps improving quickly. Staying on message this month could entail signaling an end to the bond program and a more formal exit strategy. The Fed would then have time to air out a change in the “considerable time” formulation for a later date, giving Ms. Yellen time to get all of her colleagues on board.
He concludes:"Will the Fed take these steps? Only the people in the room know that. The rest of us will see Wednesday afternoon."
* * *
Indeed Jon.
* * *
Fed sticks to 'considerable time' language on rates
Fed sticks to 'considerable time' language on rates
What you need to know from the Fed’s statement
Here are the most important things you need to know from the Fed’s policy statement, released at 2 p.m. EDT:
1. The Fed is nearing the end of its asset-purchase program.
2. It’ll still be a “considerable time” before the Fed raises interest rates. The Fed provided no solid clues about exactly when it will begin to raise interest rates, or how fast it will raise rates. Most of the members of the Federal Open Market Committee expect the first rate hike some time in 2015.
3. The Fed expects that short-term interest rates will be back to normal levels of around 3.75% by the end of 2017.
4. When it comes time to raise rates, the Fed will target interest rates primarily by adjusting the rate it pays banks for excess reserves, and will use overnight reverse repurchase agreements sparingly.
- Free trading apps
- Over 8,000 signals for copying
- Economic news for exploring financial markets
You agree to website policy and terms of use
Yellen Looking For Consensus
Like Ben Bernanke, Janet Yellen appears to be a leader in search of consensus. After artificially holding down interest rates and pumping gobs of money into the financial system, the Fed faces the near-impossible task of trying to keep the financial markets fairly tame during a shift in interest rate policy. From The Wall Street Journal:
The Key Fed Passage
The passage below, from the Fed’s July FOMC statement, is what is referred to as "guidance". This Wednesday at 2:00 p.m. EDT the market will be looking for possible changes to the two most important words below: “considerable time”.
The probability of a bullish reaction to this week’s Fed statement will increase if the passage above is not changed in a meaningful manner this week. Conversely, the probability of a bearish reaction will increase if the passage above is altered in a way that hints at “a rate hike is coming relatively soon”.
Pros And Cons Before The Fed
Since it is the market’s reaction to Wednesday’s Fed statement that matters most, it is prudent to review both the bullish and bearish cases before the fun begins. This week’s stock market video looks at cracks, concerns and support.
Investment Implications – The Weight Of The Evidence
Following Wednesday’s Fed festivities, if the S&P 500 can close above 1998, that would be a good step for the economic and stock market bulls. Conversely, if the S&P 500 finishes Wednesday’s session below 1984, concerns would remain about the possibility of further downside in equity prices.
source