Rate Cuts Coming?

[RAE]

Article out today in Bloomberg today says that the gap between current and forward-T Bill rates has now turned negative, and that usually means a rate cut is coming, as monetary policy makers respond to the threat of recession.
I am not surprised by this.........I thought the recent rate hike was a mistake.

https://www.bloomberg.com/news/arti...r&utm_term=190102&utm_campaign=bloombergdaily

 

[ESRwannabe]

Article out today in Bloomberg today says that the gap between current and forward-T Bill rates has now turned negative, and that usually means a rate cut is coming, as monetary policy makers respond to the threat of recession.
I am not surprised by this.........I thought the recent rate hike was a mistake.

https://www.bloomberg.com/news/arti...r&utm_term=190102&utm_campaign=bloombergdaily

They are also doing quantitative tightening while raising rates. Which a lot of people say has the same impact is more rate hikes.

Powell is a lawyer and I don't think he knows what he is doing. There is no inflation and the phillips curve is garbage and doesn't work. Show me the wage inflation and I'll believe we need rate hikes. Otherwise they need to stop.

 

[corn18]

They will raise rates until we are in a recession. And then won't do anything about it until we know we were in a recession 6 months ago. Just their MO since we went off the gold standard. IMHO.

 

[mrfeh]

They are also doing quantitative tightening while raising rates. Which a lot of people say has the same impact is more rate hikes.

Powell is a lawyer and I don't think he knows what he is doing. There is no inflation and the phillips curve is garbage and doesn't work. Show me the wage inflation and I'll believe we need rate hikes. Otherwise they need to stop.

Powell is one of 12 voting members, IIRC. He isn't running the Fed by himself.

AFAIK, the December hike was unanimous.

 

[Spock]

along with flash crashes and PPT flash recoveries
these whipsaw reactionary rate changes are making the markets a joke to plan around.
A month ago the Feds were plotting more hikes. The Fed clowns can't anticipate the economy any better than hedge fund mgrs can pick stocks, so why do we even need them? Let the market set rates and police the market for those trying to rig it.

 

[Dtail]

along with flash crashes and PPT flash recoveries
these whipsaw reactionary rate changes are making the markets a joke to plan around.
A month ago the Feds were plotting more hikes. The Fed clowns can't anticipate the economy any better than hedge fund mgrs can pick stocks, so why do we even need them? Let the market set rates and police the market for those trying to rig it.

haha, the only hedge funds that can pick stocks are the ones with inside info or running algorithm program trading.
Seen both examples.

 

[corn18]

I think their approach is to force something to happen by raising rates, vs. sitting back and not know what might happen by leaving them alone.

I would use this when flying the meatball landing on aircraft carriers. If the ball was in the middle (on glide slope) I would get nervous and add power to force it to move up a little. Now I knew exactly where I was and could work it back to the middle. If I did nothing, it might go up or it might go down and down was really bad.

The fed raises rates knowing that the end result may be a recession which I think they view as a better outcome than high inflation. Just my opinion.

 

[Spock]

I think their approach is to force something to happen by raising rates, vs. sitting back and not know what might happen by leaving them alone.

I would use this when flying the meatball landing on aircraft carriers. If the ball was in the middle (on glide slope) I would get nervous and add power to force it to move up a little. Now I knew exactly where I was and could work it back to the middle. If I did nothing, it might go up or it might go down and down was really bad.

The fed raises rates knowing that the end result may be a recession which I think they view as a better outcome than high inflation. Just my opinion.

Yes but... your ball was calibrated and reacted in real time.
The Fed is reading chicken entrails.

 

[razztazz]

Yes but... your ball was calibrated and reacted in real time.
The Fed is reading chicken entrails.

The economy doesn't need to react in real-time. A "crash" isn't like an actual crash. That aeroplane thing doesn't have the same margin for error. A Real-time reaction isn't a moment too soon.

 

[Spock]

The economy doesn't need to react in real-time. A "crash" isn't like an actual crash. That aeroplane thing doesn't have the same margin for error. A Real-time reaction isn't a moment too soon.

I think you are confusing the sensor with the actuator.
I'm thinking of Bernanke saying sub-prime was "contained" and "he didn't believe the growing number of mortgage defaults would seriously harm the economy," in 2007. They're flying blind.

 

[almost there]

Not easy to guestamate normal Fed movements & reactions, after going through (almost a decade) of artificially low / (1st time in 5000 year low) interest rates. My guess is they are struggling to get back to (more normal) rates. In order to have some type of control down the road. So, a couple more tiny hikes this year wouldn't surprise me at all. But will freak out the experts and the MSM.

 

[NW-Bound]

I doubt that the Fed will cut rate.

Inflation in 2018 was 2.44%. It was 2.13% in 2017, and 1.26% in 2016, and 0.12% in 2015.

Non-farm workers' income rose 3.2% in 2018.

I can hope for the Fed to pause though, given other indicators.

 

[youbet]

I doubt that the Fed will cut rate.

Inflation in 2018 was 2.44%. It was 2.13% in 2017, and 1.26% in 2016, and 0.12% in 2015.

Non-farm workers' income rose 3.2% in 2018.

I can hope for the Fed to pause though, given other indicators.

+1

Yep, despite the click-bait Bloomberg article, there is no data showing that the economy needs the stimulation of a rate cut. As "almost there" mentioned above, they are more likely concerned with having interest rates high enough that there is room to provide stimulative cuts in the future if so warranted.

 

[HFWR]

The FED should stick to their dual mandates - unemployment and inflation. It’s not their job to support lofty stock prices...

 

[38Chevy454]

+1

Yep, despite the click-bait Bloomberg article, there is no data showing that the economy needs the stimulation of a rate cut. As "almost there" mentioned above, they are more likely concerned with having interest rates high enough that there is room to provide stimulative cuts in the future if so warranted.

I agree, if the rates are held flat that will provide enough market incentive, whole leaving a little dry powder for future if things go worse.

 

[Sunset]

I doubt that the Fed will cut rate.

Inflation in 2018 was 2.44%. It was 2.13% in 2017, and 1.26% in 2016, and 0.12% in 2015.

Non-farm workers' income rose 3.2% in 2018.

I can hope for the Fed to pause though, given other indicators.

I hope they slow down as inflation velocity is decreasing.
However, I'm sure it's hard to get it right as they do a rate increase, and then the effects may not show up for many months, and are mixed in with all sorts of other effects.

 

[almost there]

Rate cut? LOL LOL Would be nice to have some room to lower rates as we have not had a recession in 10 yrs. Average 5-7 yrs. We are overdue and rates are still historically low.... Whats the fed rate now? 2.4%? 2.5%? And some are talking about lowering it? LOL LOL Just an observation.. Worth what you paid for it.

 

[Spock]

The fed (and other central banks) has been responding to markets vs. the "economy" for quite awhile.



https://northmantrader.com/2019/01/04/the-ugly-truth/
"In March 2009 markets bottomed on the expansion of QE1 which was introduced following the initial QE1 announcement in November 2008. Every major correction since then has been met with major central bank intervention. QE2, Twist, QE3 and so on. When market tumbled in 2015 and 2016 global central banks embarked on the largest combined intervention effort in history to the tune of over $5 trillion between 2016 and 2017 giving us a grand total of over $15 trillion in central bank balance sheet courtesy FOMC, ECB and BOJ:"

 

[almost there]

Agree, I just doubt its a permanent situation. Takes me back to Alan Greenspan and his "irrational exuberance".

 

[cyber888]

Article out today in Bloomberg today says that the gap between current and forward-T Bill rates has now turned negative, and that usually means a rate cut is coming, as monetary policy makers respond to the threat of recession.
I am not surprised by this.........I thought the recent rate hike was a mistake.

https://www.bloomberg.com/news/arti...r&utm_term=190102&utm_campaign=bloombergdaily

The Fed will only cut rate when the economy goes into a full blown recession. While Powell said he will wait and see to appease the market (plunge protection team - got to the fed I’m sure).. as long as the economy is not in negative growth, they will raise rates.

 

[almost there]

They will raise rates until we are in a recession. And then won't do anything about it until we know we were in a recession 6 months ago. Just their MO since we went off the gold standard. IMHO.

Nailed it.

 

[corn18]

Rate cut? LOL LOL Would be nice to have some room to lower rates as we have not had a recession in 10 yrs. Average 5-7 yrs. We are overdue and rates are still historically low.... Whats the fed rate now? 2.4%? 2.5%? And some are talking about lowering it? LOL LOL Just an observation.. Worth what you paid for it.

Wow, we've been draggin' arse @ 0% for a loooong time.

 

[GravitySucks]

My expectation is at least two hikes this year. If I was a betting man I'd take even money on four hikes.
Hoping the Fed is more concerned over a 1970s inflation scenario than the Dow.