Maury Harris Quotations

Fed officials ... likely anticipated some fallout in fixed income markets. We believe ... that Fed officials wanted to signal a greater probability of tightening in 2004 than had been priced into markets.

Today's FOMC statement did not add any new specificity or much elaboration, and the initial reaction in the bond market has been limited.

Difficulties of seasonally adjusting the retail sector around year-end suggest that the two-month average -- about flat -- is a more reliable gauge of hiring trends.

Certainly, there was nothing in Mr. Greenspan's testimony to suggest he has seen any strong preliminary data from the April employment report.

It remains unclear, of course, what role economic data really are playing in markets just now. Despite evidence that the recovery continues both in the U.S. and abroad, equity markets continue to struggle.

The bond market has been moving on two things today: the movement of stocks and this speculation about the yuan.

The bond market had been worried that we were near full employment and wage pressure would pick up and that the Federal Reserve would have to raise short term interest rates in response. But now that the all important employment cost index was up just 0.6 percent, the Fed doesn't need to raise short term rates because the economy is slowing down.

Price pressures appear to be building at crude PPI levels, but the Fed will likely wait to respond until these pressures filter into the consumer price index. We do not expect that to occur until next year.

We believe that the Fed will require both consistent solid hiring and a rise in inflation before it begins to lift rates.

In that context, he will lose credibility if he under-appreciates the extent to which (economic) growth is already weakening in response to earlier rate hikes.