17 Mar 2015
What excluding payrolls is driving Fed potential impatience? – Rabobank
FXStreet (Barcelona) - With Fed set to meet tomorrow to discuss its monetary setting, and US CPI in negative bounds, the Rabobank Team notes that the key question is what is driving Fed potential impatience.
Key Quotes
“Speculation continues to swirl over the outcome of the FOMC meeting tomorrow. Our Fed-watcher Philip Marey is sticking with a Q4 rate hike call for now, while acknowledging the risks of a Q3 move if data remain firm.”
“However, yesterday was yet another trading session where US data certainly didn’t do that – the NAHB housing index fell to 53, a third consecutive decline; manufacturing was -0.2% MoM and after revisions has also fallen for the last three months; so has capacity utilization, down to 78.9%, the lowest since February 2014; so have retail sales; capital goods orders excluding defence and aircraft have fallen for four of the last five months; and factory orders have fallen for five months straight.”
“Given we already know what CPI is doing (it’s negative YoY) and core PPI (it’s just 1.0% YoY), the key question is what, excluding strong payrolls, is driving Fed potential impatience? Can it really be a focus only on a single data series? Is it a desire to force a return to the ‘old normal’? Or is it a pre-emptive need to get some monetary ammunition ready for the next (inevitable) economic downturn?”
Key Quotes
“Speculation continues to swirl over the outcome of the FOMC meeting tomorrow. Our Fed-watcher Philip Marey is sticking with a Q4 rate hike call for now, while acknowledging the risks of a Q3 move if data remain firm.”
“However, yesterday was yet another trading session where US data certainly didn’t do that – the NAHB housing index fell to 53, a third consecutive decline; manufacturing was -0.2% MoM and after revisions has also fallen for the last three months; so has capacity utilization, down to 78.9%, the lowest since February 2014; so have retail sales; capital goods orders excluding defence and aircraft have fallen for four of the last five months; and factory orders have fallen for five months straight.”
“Given we already know what CPI is doing (it’s negative YoY) and core PPI (it’s just 1.0% YoY), the key question is what, excluding strong payrolls, is driving Fed potential impatience? Can it really be a focus only on a single data series? Is it a desire to force a return to the ‘old normal’? Or is it a pre-emptive need to get some monetary ammunition ready for the next (inevitable) economic downturn?”