The markets were prepared for Greenspan to end his final meeting with the funds rate at neutral. What they got instead is the statement that rate hikes still 'may be needed.' This was not music to the market's ears.
The market is on guard after Broaddus reminded us that the day of reckoning when the Fed raises rates is drawing nearer and the rebound in global stock markets is adding fuel to the fire.
We're back to expecting a rate cut on December 11. Meyer changed people's thinking by essentially saying there's no limit as to how low (the federal funds rate) could go and today we're getting an added boost from the (weak) stock trade.
Expectations of Fed action have gone though the roof. The market is looking for two 25-basis-point moves and one 50-basis-point move before the presidential election.
consumer spending has not been dented by the hurricane-inspired rise in gasoline prices and fears of higher home heating oil bills.
Consumers are more optimistic during this holiday season, and retailers hope this means that they will hear the ringing of cash registers in what has been a lackluster sales period so far. This augurs well for a continued expansion of the economy next year.
That leads to expectations that the Fed is still going with its series of rate hikes.
Business capital spending is coming on strong and the timing of these equipment purchases could not be better. Business spending will take up the slack as the housing slowdown cools consumers' appetites.
It may come down to 59.5. This reading would not indicate a softer economy.
It may be just a matter of time before the public's inflation expectations start to rise. Commodity prices are soaring.
