Monday, October 10, 2016

Fed Found Excuse To Hold Rates Through 2016

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*We showed how the Fed was lining up dovish on Thursday.
*On Friday the Fed confirmed that through the WSJ.
*The jobs numbers matched Fed estimates but they found something in there to use as an excuse to pull back from rate hikes.




We wrote a report Thursday morning showing how the Federal Reserve board members were backing off from wanting to raise rates once again. Then the Friday jobs numbers came out which matched board member estimates to raise rates. Instead the Wall Street Journal ("WSJ") confirmed that the Fed is likely on hold maybe for the rest of this year. While there are many factors driving markets today, a lack of a rate hike would be a benefit to stocks.
The Jobs Number Was What The Fed Needed To Raise Rates
Here's Friday's report.
The report of 156,000 was at the high end of what Fed officials had said drives full employment.
Fed Vice Chair Stanley Fischer said the following on August 21st:
"Estimates of monthly job gains needed to keep the unemployment rate steady range widely, from around 75,000 per month to 150,000 per month, depending on what happens to labor force participation among other things."
He says here that anything in the range of 75,000-150,000 keeps unemployment steady. Friday's 156,000 is at the high end of that range.
In that same speech Fed Vice Chair Fischer said,
"So we are close to our targets."
These jobs numbers should support rate hikes but as we showed Thursday morning and we will show further on, the Fed is backing off rate hikes once again.
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