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phil
December 17th, 2014 at 2:03 pm

Pre-Fed Treasury Yields::



Rubio attacks Pope Francis for helping broker Cuba deal http://thkpr.gs/3604800 

Statement still says "considerable time" but slight change to language.  Says they will be "patient" raising rates.

It's a bit bullish but nothing that should sustain a move up.  Let's watch 2% lines (strong bounce) to see if they get taken or, otherwise, we'll see if 1% gains (weak bounce) can hold.

The US Federal Reserve is dumping its forecast of low interest rates for a "considerable time" in a strong signal it expects to tighten monetary policy by the middle of 2015.

In new language designed to reassure markets that rate rises are not imminent, the rate-setting Federal Open Market Committee says it can be "patient" in judging when to start hiking rates.

The decision to drop "considerable time" despite global market turmoil shows the Fed's confidence in strong US growth and its desire to prepare financial markets for tighter monetary policy next year.

But in a carefully weighted statement that prompted three dissents – passing by 7 votes to 3 – the FOMC said it regards the new guidance as consistent with the old version. It strongly suggests the Fed is looking towards June 2015 as the timing for a first rate rise.

Further offsetting the change of language, the FOMC forecast a slower pace of rate rises in 2015 and 2016, partly closing a yawning gap with market expectations.

Instead of expecting interest rates of 1.25 – 1.5 per cent by the end of 2015, the FOMC now expects rates of 1 – 1.25 per cent. That suggests four quarter point rate rises next year instead of five. Instead of rates at 2.75 – 3 per cent by the end of 2016, the Fed now expects rates at 2.5 per cent.

The statement prompted two dissenters who thought it was not tough enough and one who thought it was too strong.