Bond rally nearing an end?
- Thread starter gharghur2
- Start date
I didn't understand the Fed Meeting charts right away myself. What I finally figured out is that each chart plots the probability of 4 different outcomes at the end of the meeting specified by the chart title. For example, the <i>May Meeting</i> chart uses a green line to show the fluctuating probability that the Fed rate will be 4.75% in May; The red line shows how the probability of a 5% rate in May evolved so far; And the other two lines are for the other two scenarios, 4.25% or 4.50% rate in May. The vertical yellow lines are important dates that had or were expected to have an impact on probabilities assigned to the four different scenarios.
The perspective on inflation didn't change between the previous meeting and this one.
<b>January 31st, 2006 meeting</b>
Core inflation has stayed relatively low in recent months and longer-term inflation expectations remain contained. Nevertheless, possible increases in resource utilization as well as elevated energy prices have the potential to add to inflation pressures.
The Committee judges that some further policy firming may be needed to keep the risks to the attainment of both sustainable economic growth and price stability roughly in balance. In any event, the Committee will respond to changes in economic prospects as needed to foster these objectives.
<b>March 28th, 2006 meeting</b>
As yet, the run-up in the prices of energy and other commodities appears to have had only a modest effect on core inflation, ongoing productivity gains have helped to hold the growth of unit labor costs in check, and inflation expectations remain contained. Still, possible increases in resource utilization, in combination with the elevated prices of energy and other commodities, have the potential to add to inflation pressures.
The Committee judges that some further policy firming may be needed to keep the risks to the attainment of both sustainable economic growth and price stability roughly in balance. In any event, the Committee will respond to changes in economic prospects as needed to foster these objectives.
<b>January 31st, 2006 meeting</b>
Core inflation has stayed relatively low in recent months and longer-term inflation expectations remain contained. Nevertheless, possible increases in resource utilization as well as elevated energy prices have the potential to add to inflation pressures.
The Committee judges that some further policy firming may be needed to keep the risks to the attainment of both sustainable economic growth and price stability roughly in balance. In any event, the Committee will respond to changes in economic prospects as needed to foster these objectives.
<b>March 28th, 2006 meeting</b>
As yet, the run-up in the prices of energy and other commodities appears to have had only a modest effect on core inflation, ongoing productivity gains have helped to hold the growth of unit labor costs in check, and inflation expectations remain contained. Still, possible increases in resource utilization, in combination with the elevated prices of energy and other commodities, have the potential to add to inflation pressures.
The Committee judges that some further policy firming may be needed to keep the risks to the attainment of both sustainable economic growth and price stability roughly in balance. In any event, the Committee will respond to changes in economic prospects as needed to foster these objectives.
Hilarious! It looks like it doesn't it?
The beginning of the statement:
"The slowing of the growth of real GDP in the fourth quarter of 2005 seems largely to have reflected temporary or special factors. Economic growth has rebounded strongly in the current quarter but appears likely to moderate to a more sustainable pace..."
"rebounded strongly, but appears likely to moderate..."
Rebounded means they are stating a fact, and appears means they don't know for sure. But might: make it so, Data!
S.T.Sounds to me the economy is pretty strong and they are playing it safe. Yet stocks are acting like the sky is about to fall.