Fed gives no clues and that could leave the market in a pickle over Dec

Only subtle changes in language won"t give hope to the bulls

The standouts from the statement were,

• 
  
  A mark down in household spending from "been growing strongly" to "rising moderately"
  
  


• 
  
  A change of "inflation has continued to run below" to "increased somewhat but is still below"
  
  


• 
  
  "Inflation compensation measures remain low" to "Have moved up but remain low"
  
  


• 
  
  The dropping of the "inflation expected to remain low" to leave just "inflation is expected to rise to 2% over the medium term"
  
  


• 
  
  From "to wait for further evidence of continued progress" to "to wait for some further evidence of continued progress"
  
  

It"s all just rewording the text without making any definitive comments. It"s as boring as you can get, and if the FOMC has got the election on their minds then this is as drab as they could get it, to get them through until Dec.

While I think that the Rosengren pullback is the big surprise, it"s not shaken the market, as the PA is telling us and the interest rate probabilities after the release. Dec stood at 68.8% before the meeting and they"re now at 77.5%. Being based on the futures market, that might just be a result of some profit taking or position adjustment before the announcement.

Eitherway, we won"t know Rosengren"s thoughts until the minutes, unless he pops up somewhere beforehand. His last speech was 17th Oct and he was fairly strong on wanting to hike;

"I want to probe, I don"t want to plunge," he said. "I am getting more concerned about the optionality we are losing if we wait too long... "We have the luxury right now to make a change, wait a little while, see what the impact is."

As I"ve already mentioned, this looks the perfect punt into Dec but looking at this statement, I"m less certain of a Dec hike than I was 30 minutes ago, as we got stronger language in the FOMC prior to the Dec 2015 hike.

Fed gives no clues and that could leave the market in a pickle over Dec
Fed gives no clues and that could leave the market in a pickle over Dec
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