Yet another market that doesn’t seem to be dancing to the central bankers’ tune (see “Crisis Progress Report,” SLL, 1/29/15). From Jeffrey P. Snider at Alhambra Investment Partners:
Janet Yellen and her colleagues would like to welcome you, not unlike Tim Geithner’s 2010 expedition in this area, to the recovery. They have removed pretty much all language that would make you think there was anything like lingering destructiveness or erosion. In doing so, they make it very plain that they want you to believe that they will be ending ZIRP, just as they have done to QE.
There is the “solid pace” of economic expansion which has meant “strong job gains”, though, curiously, there won’t be any of the mainstream “inflation” that usually accompanies this outlook. The world may be concerned about oil and all that, but the FOMC wants you to know that you should focus on them instead of such distractions.
Yet for all the supposed expertise and the “best and brightest” that sit upon the monetary throne in the US, funding markets just rejected everything the FOMC proclaimed. Knee-jerks are usually conforming, at least in some manner, but the eurodollar market, in particular, traded in the “opposite” direction of what you might expect had the FOMC left any impression.http://www.alhambrapartners.com/2015/01/28/funding-markets-just-called-the-fomcs-bluff/
To continue reading: Funding Markets Just Called The FOMC’s Bluff
