Thread: Markets, Fed Policy and Managing Expectations

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  1. #1

    Default Markets, Fed Policy and Managing Expectations

    One would think the Fed officials would like to get out of the spotlight and just read the data, meet every two months, decide to raise or not raise rates, explain why and return to their cozy offices.
    That is how the Fed used to operate. There was no mid-Federal Open Market Committee (FOMC) meeting state of affairs, or a litany of February governor speeches at every high-dollar chicken and pea luncheon spanning the country.
  2. #2

    Default

    Although many of the functions the Fed conducts are business as usual, the big difference today from years gone by is how the Fed fails to speak with one voice. Now, investors have to play the proverbial guessing game, which results in market volatility.
  3. #3

    Default

    This past Friday, the 10-year Treasury briefly traded under 2.3 before reversing higher into the market is close. It left U.S. Treasuries little changed as stocks and the U.S.
  4. #4

    Default

    The catch-22 is that the Fed floated the idea of an exit strategy. The Dow then gave up a 200-point rally and traded into negative territory inside of one hour. It harks back to similar commentary that former Fed Chairman Ben Bernanke laid out in mid-2013 when he talked about exiting the stimulus program. Bond yields jumped much higher than expected and spurred numerous Fed governors to try to talk back the market, especially bond yields. It seems the Fed has a real issue of not letting the markets trade freely in accordance with real-time sentiment.

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