Hawkish FOMC Member said, “March Rate Hike Possible”

Hawkish FOMC Member said, “March Rate Hike Possible”

Hawkish FOMC Member said, “March Rate Hike Possible”

$DIA, $SPY, $QQQ, $VXX

A FOMC member Thursday added his hawkish tone to a growing group of Fed officials who are indicating that they could raise rates in March.

FOMC member Jerome Powell said in a TV interview that he believed the Fed was close to achieving its targets on full employment and 2% inflation.

“I think the case for a rate increase in March has come together, and I do think it is on the table for discussion,” he said.

Mr. Powell’s comments were the latest in a series of hawkish remarks from Fed officials this week that have raised the possibility the Fed will hike rates at its 14-15 March meeting.

Fed Chairwoman Janet Yellen is scheduled to speak on the economic outlook Friday and she could at that time decide to send a strong signal that a rate hike was coming.

Mr. Powell made his points in his interview Thursday, saying, “I think we are as close to our mandates as we have been in a very long time.”

The Fed boosted its Key policy rate by a 1/4 pt to a new range of 0.5 to 0.75% at its December meeting and indicated it expected to raise rates 3 times in Y 2017, which would be a pick-up from the 1-hike-per-year pace of the past 2 years.

Asked if the Fed might boost rates at a faster pace, Mr. Powell said that he still felt that three rate hikes in Y 2017 “still feels about right to me” although he said the actual pace would depend on what the economy does.

Until recently, financial markets had put a low probability on a March rate hike, believing that Fed officials would want to see the size of President Donald Trump’s economic stimulus program and would prefer to wait until June when more was known about President Trump’s plans and the chances that Congress will adopt the program of tax cuts and increased spending on the military and infrastructure projects.

The CME Group, which tracks investor sentiment on Fed rate hikes, now puts the probability of a March hike at 75%, up from around 35 five days ago.

Thursday, the major US stock market indexes finished at: DJIA -112.58 at 21002.97, NAS Comp -42.81 at 5861.24, S&P 500 -14.04 at 2381.90

Volume: Trade on the NYSE was heavy with 1.59-B/shares exchanged.

  • NAS Comp +8.9% YTD
  • S&P 500 +6.4% YTD
  • DJIA +6.3% YTD
  • Russell 2000 +2.8% YTD
HeffX-LTN Analysis for DIA: Overall Short Intermediate Long
Bullish (0.26) Neutral (0.17) Bullish (0.32) Bullish (0.29)
HeffX-LTN Analysis for SPY: Overall Short Intermediate Long
Bullish (0.35) Bullish (0.31) Very Bullish (0.50) Bullish (0.25)
HeffX-LTN Analysis for QQQ: Overall Short Intermediate Long
Very Bullish (0.56) Bullish (0.46) Very Bullish (0.65) Very Bullish (0.58)
HeffX-LTN Analysis for VXX: Overall Short Intermediate Long
Bearish (-0.40) Bearish (-0.27) Very Bearish (-0.52) Bearish (-0.42)

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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