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The Fed Will Raise Rates In December, And Yellen Isn’t Going Anywhere

Friday, November 18, 2016 5:17
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From Brad Hoppmann: Fed Chair Janet Yellen made her first public appearance since the election. Yesterday, she spoke before the Congressional Joint Economic Committee.

The big takeaway from Ms. Yellen was a phrase that everyone is interpreting as confirmation of a Fed rate hike at the December FOMC meeting.

That phrase is … “relatively soon.” As in, when an interest-rate hike is coming our way.

Yes, it’s Fedspeak at its best … never quite direct enough to be unequivocal, but never quite vague enough to not be led toward a specific interpretation.

Here’s the “nut graf” of sorts from the Fed Chair in her comments to Congress, as she reminded us all of what the Fed wants to do:

“At our meeting earlier this month, the [Federal Open Market] Committee judged that the case for an increase in the target range had continued to strengthen and that such an increase could well become appropriate relatively soon if incoming data provide some further evidence of continued progress toward the Committee’s objectives.”

Well, the data that’s come in of late has largely provided further evidence for the Fed (e.g., strong retail sales in October and September).

That means, if you’re a betting type, the odds are strongly in your favor for a 25-basis-point hike in the cost of capital just in time for Santa’s visit.

In addition to the virtual confirmation of a rate hike next month, Yellen made it clear that she wasn’t going anywhere … despite the criticism she received during the campaign from President-elect Trump.

When asked if there were any scenario where she wouldn’t serve out her term, the Fed chair said she has no intention of stepping down before her four-year term expires in early 2018.

So, look for Ms. Janet to continue being a fixture in Washington until then … and potentially until 2024, when her 14-year term as a Fed governor expires.

The iShares Barclays TIPS Bond Fund ETF (NYSE:TIP) closed at $113.49 per share on Thursday, down $0.19 (-0.17%). Year-to-date, the largest inflation-protected bond fund by assets has gained 3.47%.


This article is brought to you courtesy of Uncommon Wisdom Daily.

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