Today they only had a couple comments:
...WHAT ECONOMISTS ARE SAYING
Capital Economics: "With the vote unanimous and the median rate projection for end-2019 revised down by only 20bp, this is hardly the 'dovish hike' that some were anticipating."
Morgan Stanley: "A bit confusing, the longer-run dot came down from 3% to 2.75% such that even though the entire path for rates shifted lower in the out years, the amount of restrictive policy the Committee believes is needed remains unchanged."The Journal's Greg Ip has his own take here:
Real Time Economics: Powell Follows the Data, Not the Market
Meanwhile, ZeroHedge has a roundup of some things folks who are paid to think about this stuff are thinking about:
Jeffrey Rosenberg, chief fixed income strategist for BlackRock: "The dots were a little bit disappointing"...MORE
Greg Staples, co-head of fixed income at DWS: "Fed dots show significant group still see 3 hikes for ’19: "
- “The most important thing is the dots. The dots met market expectations. A little bit of a disappointment in not seeing bigger reduction in terms of further gradual increases, just the introduction of some in there to soften it, there was bigger expectations there, but I think that’s minor relative to the dots. I think you got the dovish hike.”
Daniel Katzive, head of FX at BNP: "Hikes wasn't super dovish"
- Even the downward revision in the FOMC’s rate projections has a hawkish tilt, said Greg Staples, co-head of Americas fixed income at DWS. Discussing the dot plot, he observed that while the median dot has dropped to imply two hikes in 2019, “there’s still a significant cadre within the Fed that thinks that three hikes will still be in the cards”
- "The Fed is indicating that it’s listening to the markets, it has respect for the markets, but it’s not going to be ruled by the markets"; Staples sees potential for the curve to steepen somewhat, led by a decline in short-end yields.
Scott Minerd, CIO at Guggenheim Partners: "I think people are scared"
- The dollar’s rally on the Fed’s decision to raise interest rates was, in part, because the hike wasn’t "super-dovish"
- “You avoided the super-dovish scenario and you got what the market was expecting,” Katzive told Bloomberg
- The BNP strategist expects Jay Powell to “heavily emphasize” data-dependence at press conference; expects 1Q economic data will be good enough for another Fed hike, which he says implies that the dollar will hold up “pretty well”
Dennis Debusschere, head of portfolio strategy at Evercore ISI: "Investors will view this as hawkish"
- “We’re looking at a world where markets have gotten so spoon-fed for so long that any big change in anything upsets them. The interesting thing is the volatility around financial assets is introducing another element of risk that I don’t think any of us anticipated to happen right now. I think people are scared."
“10-0 vote on the hike, that sends a strong signal to Trump, potentially. Given we know some doves have been calling for a pause. They signaled two instead of three hikes in 2019 and kept the gradual increase language in, which investors will view as hawkish.”
Personally I think Chairman Powell may have just given the President an early Christmas present.
He was going to have to hike some time [see Ip, above] and putting it off to next year would raise the risk of recession in 2020.
In addition to being a leap year 2020 is the year of the next U.S. presidential election and incumbents running during recessions/depressions don't have a very impressive win rate.
Even post recession—see George H.W. Bush—is tough if your opponent insists it is still going on.
Hence James Carville's always and everywhere true mantra: "It's the economy stupid."
