Chillin' out till it needs to be funded
Ben Bernanke’s first meet the press for 2012 is another hour away while the Policy Statement following yesterday’s FOMC meeting shows more of the same 0-0.25% target rate till late 2014. Pending any tax reforms of course that have been indicated by the latest consignments from the Caymans ( usually come thru the Taxman on this journey but can’t say which school of Economics) and the no new QE3 supporting statement, which may yet come in the next 30 minutes or during the Press meet, it is much a sound policy stating that the optimism we expect in the first quarter is well deserved yet on a short fuse till now.
The Fed has however not encouraged anyone with the Zero rates till 2014. Most will see their rising yields crash back again, and they will do so for all US Treasury investments of up to 3 years maturities. Of course with European sovereign holdings still deleveraging while corp bonds in Europe start getting attention the Fed Swaps would be working overtime to push the American yields back but a Fed mandated rate of “Zi?p” could spoil all the fun..and that is where the meet the press comes in, till when the QE3 lobby will have the trading floors.
Of course StanChart, the global economist that follows us in being right about everything has never been right about the USA, so you can’t worry about their latest salvo on underperformance from the US below 2% predicated on the same living by the pond philosophy, so many are desperate to live to, the US however is likely to improve on its Auto and housing numbers from all trends along with the morning dictum as Pending home Sales are up at the high November levels, yoy dips hardly material, there’s been no new stimulus since Septembers’s strange $404 bln figure, the House Price Index is down just 1.8% much better than where it was ( new data is for November 2011 yet) and the MBA report again is pretty good after removing the volatility from the holiday shortened data on the 4 week average, index up 0.5% and the Refi up 5%
Of course, if there is the meet the press, we will be there to fit in the curve on volatile market commentary expecting to sway our statis dominance on the line with Ben..