It's very clear that there's minimal inflation pressures in the U.S. beyond the oil-price pressures. A lot of fundamental players will see value in the 10- year Treasuries at 4.8 percent levels. |
Just as the market overshot on the downside in yield in May/June, the risk is that it now overshoots on the upside. |
Obviously, a big rise in the core CPI would get the ball rolling toward another hike, but it's far from clear that will be the outcome. |
Rising oil prices are quite unhelpful, and falling prices are quite helpful in terms of giving stimulus to the economy. Lower prices feed through pretty well to everyone immediately. |
The [economic] data are what determine what the Fed will do today; they don't see last night's result as a sea change. |
The behavior of equity prices from here can make the economy heaven or hell. The further equity prices fall, the gloomier consumers and business people will become, the more corporate and financial disasters will be unearthed, and the less willing lenders will be to lend and spenders to spend. |
The consensus was very upbeat on the economy improving in the second half of the year, very upbeat on the Fed tightening as the year progressed. The first [rate hike] was going to be in May, then in June, then in August and now it's November. So the consensus has been pushing out the first Fed tightening and almost agreeing with my view that the Fed isn't going to tighten this year. |
The Fed is trying to do what it can, but the history of the past 200 years is that big booms tend to end badly -- big equity market booms in particular. The Fed so far has done a magnificent job of holding the show together, but we don't know what effects of the bubble are still in the pipeline. |
The Fed ultimately will be forced to cut rates further because we have had this ongoing issue of sub-par growth, disappointment on the jobs front and core inflation edging lower. People are talking about a terrific snap-back in the economy after the war, but I'm skeptical we're likely to see it. |
The inflation risk is less intense than many would imagine and, as energy prices edge lower, some investors are seeing value at current yields. It helps reduce the pressure the Fed has been worried about. |
The lesson from Australia is, as long as interest rates stay relatively low, the market will cool, not crash. |
The longer the Fed drags this out without cutting rates, the more they're admitting they don't have much firepower at all. They're sitting on their hands, hoping for the best. |
The markets are coming to understand that policymakers will be inclined to keep rates very low for an extended period -- the FOMC (Fed rate-setting committee) can still only dream that the economy will be strong enough in 2002 to justify a rate hike. |
The markets were a little disappointed that the Fed didn't give any explicit hint that a pause is around the corner. |
The Republicans have control of the Senate, but the economy is still struggling. Maybe [Republican control] will lead to some tax cuts, but that's not going to happen in the near term. The U.S. economy needs all the help it can get, and soon. |