Fed liftoff: focus on leadership, labor market and stocks – BBH

Discussion in 'Fundamental Analysis' started by FXStreet_Team, Oct 27, 2015.

  1. FXStreet_Team

    FXStreet_Team Well-Known Member Trader

    Oct 7, 2015
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    FXStreet (Córdoba) - According to analysts from Brown Brothers Harriman the FOMC statement tomorrow will be watch closely, particularly what it says about the labor market and inflation.

    Key Quotes:

    “No one expects the Federal Reserve to change policy tomorrow. Those who expect a move this year are focused on the mid-December meeting.”
    “It will be interesting to see how the Fed characterizes the labor market after two soft nonfarm payroll reports. However, other readings on the labor market do not confirm the deterioration.”

    “Although many observers claim to be tired of a Fed move hanging over the markets, they will have to be patient for a bit longer. The Fed's communication has shifted expectations from date-dependent to data-dependent.”
    “To rule out a December hike, which some observers anticipate, would seek to undo some of that necessary work. In addition, the Fed's leadership has continued to suggest that, provided there are no new negative surprises and the economy evolves as officials expect, it still anticipates a hike before the end of the year. As there are two meetings left including this week's meeting, it puts the onus on the December meeting.”

    “There are three things we have encouraged investors to focus on when trying to assess the risks of a December move. First, listen to the Fed's leadership - Yellen, Fischer, and Dudley. Dudley's warning in August that a rate hike was less compelling was a good tell of the September disappointment. Second, watch the data on the US labor market. Like in Japan, the continued improvement in the labor market offsets much of the disappointment elsewhere. Third, watch the global markets. Global stock markets need not rise, but ideally the current relative calm will persist.”
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