Expecting US Fed to Include “Hawkish” No-hike Language in Policy Statement

Expecting US Fed to Include “Hawkish” No-hike Language in Policy Statement

Expecting US Fed to Include “Hawkish” No-hike Language in Policy Statement

$DIA, $SPY, $QQQ, $VXX

The US Fed will not raise interest rates when it meets this week, but the FOMC will include “Hawkish” no-hike language in policy statement, said Jeffrey Gundlach, CEO of DoubleLine Capital.

Mr. Gundlach said Fed officials “want to be able to raise rates later this year if the WIRP (World Interest Rate Probability) index is in the 40’s.”

Currently WIRP, which measures the implied probability of an interest rate hike between 0 and 100, sits around 18% for the Fed’s meeting Tuesday and Wednesday

Mr. Gundlach said earlier this month on an investor webcast that Fed officials want to show that they are not guided by the markets. “The Fed wants to show, at some point, that they can’t be replaced by WIRP. The only way they can do that is to tighten when WIRP is below 50.”

Mr. Gundlach told investors that the Fed will not hike in September if the WIRP is below 40 and the S&P 500 is below 2150.

Monday, Mr. Gundlach also said US Treasury bonds are “sniffing out a new bond-market unfriendly environment, which likely includes a fiscal-policy pivot.”

In that regard, the yield on the 10-year T-Note is in a new range: “1.70% is the new 1.55%.”

Tuesday, the US major stock market averages finished at: DJIA +9.79 at 18129.96, NAS Comp +6.33 at 5241.36, S&P 500 +0.64 at 2139.76

Volume: Trade on the NYSE came in at at light 741-M/shares exchanged

  • Russell 2000: +8.2% YTD
  • S&P 500: +4.7% YTD
  • NAS Comp: +4.7% YTD
  • DJIA +4.1% YTD
HeffX-LTN Analysis for DIA: Overall Short Intermediate Long
Neutral (-0.22) Neutral (-0.21) Neutral (-0.23) Neutral (-0.21)
HeffX-LTN Analysis for SPY: Overall Short Intermediate Long
Neutral (-0.22) Bearish (-0.27) Bearish (-0.38) Neutral (-0.03)
HeffX-LTN Analysis for QQQ: Overall Short Intermediate Long
Neutral (0.21) Neutral (0.02) Bullish (0.35) Bullish (0.25)
HeffX-LTN Analysis for VXX: Overall Short Intermediate Long
Neutral (-0.21) Bullish (0.31) Bearish (-0.39) Very Bearish (-0.54)

Stay tuned…

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Paul Ebeling

Paul A. Ebeling, polymath, excels in diverse fields of knowledge. Pattern Recognition Analyst in Equities, Commodities and Foreign Exchange and author of “The Red Roadmaster’s Technical Report” on the US Major Market Indices™, a highly regarded, weekly financial market letter, he is also a philosopher, issuing insights on a wide range of subjects to a following of over 250,000 cohorts. An international audience of opinion makers, business leaders, and global organizations recognizes Ebeling as an expert.

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