We don’t just want to crowdsource forecasts here at almanis. We want to do so with the best supporting information. To kick off, we’re running a series of blogs that should help give us sufficient context to make a well informed answer to the biggest question in financial markets just now: “Will the US Federal Reserve increase its target range (or rate) before the end of the year?” Hopefully these blogs will serve as a decent guide for the interested amateur and a reasonably comprehensive checklist for the professionals.
Below gives you a start on a Fed timeline, highlighting the key turns taken in the market’s Fed rate expectations over the past few months. Please feel free to leave suggestions, additions and improvements in the comments below. The aim is to end up with a wiki-timeline powered by you. Remember, you make money for narrative as well as forecasting!
6th November 2015: Big upside surprise in October Nonfarm Payrolls
- Headline 271k reported against 185k Bloomberg median
- A big turn-around after August and September Payrolls had disappointed
September: 142k initial estimate vs. 200k Bloomberg median
August: 173k initial estimate vs. 217k Bloomberg median
28th October 2015: Hawkish FOMC Statement Shifts Focus onto December Meeting
- FOMC keeps rates on hold, as universally expected
- Statement’s forward looking language switches focus to “whether… to raise the target range at its next meeting” from “how long to maintain this target range”.
- Removes sentence inserted into September Statement referring to global economic and financial risks.
12th/13th October 2015: Dovish dissent within Fed Board of Governors
- Fed Board of Governors members Dan Tarullo and Lael Brainard present dovish commentary on consecutive days, appearing to run contrary to earlier statements made by Fed Chair Janet Yellen.
- Both question whether the Fed should rely on a simple Phillips Curve analysis in predicting an upswing in inflation.
2nd October 2015: Nonfarm Payrolls disappoint for the second month running
- September payrolls print at 142k against 200k Bloomberg median
- August payrolls revised down to 153k from 173k
17th September 2015: Fed keeps rates on hold, sends dovish message
- Fed keeps rates on hold despite nearly half of Bloomberg economist survey having expected a hike.
- Statement stresses global economic and financial risks
- FOMC projections show sharp fall in the expected optimum path of policy rates both over the short and longer-term.