26 Sep 2013
Flash: Fed; The question is, now what? –TD Securities
FXstreet.com (London) - Research teams at TD Securities said the Fed can choose to taper in October.
Key Quotes:
“The point, however, is that the hurdle to do so now is considerably higher given their reluctance to use a free pass last week”.
“The economic landscape is improving, but it will not be materially different in five weeks, and judging by some weakness in the next ISM report and range bound jobs numbers next Friday, it may even feel modestly weaker”.
“A resolution of the budget battle could provide cover to taper in October. However, the optics of this would be unfavourable for the Fed, smack of inconsistency, and we would expect lingering effects from political infighting to persist late into October”.
“The Fed could use December looms as a possibility, but the Fed hates tightening around Christmas. That reluctance is reinforced by low year-end liquidity. That puts January in play, but if the next Chairperson is not Yellen it may be hard to justify a regime switch at Bernanke’s last meeting”.
“The implication is that the delay in September is a multi-meeting delay”.
Key Quotes:
“The point, however, is that the hurdle to do so now is considerably higher given their reluctance to use a free pass last week”.
“The economic landscape is improving, but it will not be materially different in five weeks, and judging by some weakness in the next ISM report and range bound jobs numbers next Friday, it may even feel modestly weaker”.
“A resolution of the budget battle could provide cover to taper in October. However, the optics of this would be unfavourable for the Fed, smack of inconsistency, and we would expect lingering effects from political infighting to persist late into October”.
“The Fed could use December looms as a possibility, but the Fed hates tightening around Christmas. That reluctance is reinforced by low year-end liquidity. That puts January in play, but if the next Chairperson is not Yellen it may be hard to justify a regime switch at Bernanke’s last meeting”.
“The implication is that the delay in September is a multi-meeting delay”.