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- With the economy growing below 2%, the Fed would have no reason to hike rates.
With the economy growing below 2%, the Fed would have no reason to hike rates.
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Loading..."When there's downward pressure on growth, one choice is to adjust economic policy, increase deficits, relax monetary policy. That might have a short-term benefit, but may not be beneficial for the future." -- Li Keqiang
Monetary Policy
Probably the highest profile event of an already crowded day for macroeconomics will be the Fed's policy announcement at 2pm ET. The FOMC policy statement will be all you have to go on, as there will be no press conference and no economic projections made today -- not that those projections have been very useful when they are made available. Market expectations are for no increase in the target range of the fed funds rate until June.
Weaker Dollar
You may or may not have noticed Peter Navarro, head of the president's National Trade Council refer to the euro as "grossly undervalued". This is not the first time that the president, or someone from his administration, has made a blatant attempt to talk down the dollar.The possibility exists that we see a weaker dollar policy pursued by the U.S., as the administration tries to make bilateral trade deals with individual nations.
If this coincides with actual forward progress on the president's economic agenda sometime this year, or early next, the growth, and public spending would provide enough cover for the Fed to then raise rates freely without pushing the DXY to uncomfortably high levels.
Gold in Dollar Terms
Gold! As long as the U.S. dollar is plumbing some new depths vs. its competitors, commodities priced in those very same dollars gain strength. The political risk that mildly shook equity markets over the last two days adds to the yellow stuff a touch of safe-haven value as well. Gold peaked at $1215 yesterday.
All Day: Total Vehicle Sales (January): Expecting 17.8 million, December 18.4 million units. 2016 was a record year for auto sales. In fact, sales have risen now for seven consecutive years, and that full year record that 2016 broke ... was set in 2015. This is a leading indicator of consumer health, and will impact the headline retail sales print in two weeks. The reason that this will not have a major impact on your day as a trader is the piecemeal way that the number is released, and then put together. The individual auto-makers will, however react in real time.
08:15 - ADP Employment Report (January): Expecting 166,000, December 153,000. Actual is 264.000
ISM Manufacturing Index (January): Expecting 55.0, December 54.7.Actual is 56.0
FOMC Policy Announcement. With the odds of a rate increase being announced at this meeting down around 4%, this announcement will likely pass somewhat quietly. There is no press conference, and there will be no economic forecasts made. Any market moving shove will have to come from the statement itself. With the just-released GDP numbers showing sub 2% growth both for the quarter, and for the year and with a stagnant Core PCE Price Index, this gang is going to have to ratchet down their expectations for the year at some point.
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