A Feducation after Janet Yellen's Speech

Posted by Capital Trading Group on Sep 26, 2017 10:39:36 AM

           Last week saw an FOMC meeting that was widely anticipated as having no change to its interest rate policy and that was certainly the case.  As for balance sheet reduction, that is to commence in October.  The size and the scope of this rebalancing is not noteworthy because we truly figure the FED will merely adjust this as time moves to the left.  Its miniscule to say the least and we really don't see it as having much of an overall impact as much as it seemed to be more of a credibility tool.  Remember their balance sheet currently sits at some $4.4 Trillion so $5 billion a month in roll off, well you get the picture.  One item that stood out and one that did a number on the short end of the yield curve was the fact that 12 members expect a rate hike in December, with just 4 expecting rates to remain unchanged.  We suppose there was a little bit of everything for everyone as near term hawkishness was followed by longer term projections showing Fed Funds around 2.75%, couple that with their 2% inflation target, showing a benign growth projection.  Speaking of inflation or lack thereof we have this juicy chart which we suppose, depending on your income bracket, the bottle may seem half full or half empty of inflation:

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