WSJ Timiraos on CNBC:
- A 25 basis point hike because skipping a hike risks a market meltdown
- the case for a pause boils down to concerns that credit events can become serious and it is better to move slowly.
- The Fed decision is likely to depend on market response in coming days
- All we’ve heard from the Fed is that we have the tools to solve financial stability problems so we can keep our eyes on the prize of restoring price stability.
Yesterday, the ECB’s Lagarde expressed a similar view that there are tools to solve financial stability, but inflation is their mandate.
We have to be aware that the Fed and the ECB are talking. The ECB hiked by 50 basis points, but you can argue that the ECB is behind the curve relative to the Fed. I would think that this is indeed likely to support 25 basis points.
The opportunity for 25 basic point
Basic point
A basis point is a unit of measurement used to express the change in value of a financial instrument, such as a bond or loan. One basis point is equal to 0.01%, or one hundredth of a percentage point. For example, if the interest rate on a bond increases from 5% to 5.25%, that is an increase of 25 basis points. It is often used in the context of interest rates, yields and credit spreads. The shorthand for basis point is bps and on a trading floor you will hear them referred to as ‘
A basis point is a unit of measurement used to express the change in value of a financial instrument, such as a bond or loan. One basis point is equal to 0.01%, or one hundredth of a percentage point. For example, if the interest rate on a bond increases from 5% to 5.25%, that is an increase of 25 basis points. It is often used in the context of interest rates, yields and credit spreads. The shorthand for basis point is bps and on a trading floor you will hear them referred to as ‘
Read this Term rise is the probability of a favorite at 71%, but what is vulnerable is the projection of rates along the way. The market prices in January 2024 are at 3.95% with a final rate of 4.83%. That implies one more hike to 4.75% to 5%, and then a move down to 3.75% to 4% at the end of January (or down 1 bps). I don’t think that’s a stretch.
/inflation
Inflation
Inflation is defined as a quantitative measure of the rate at which the average price level of goods and services in an economy or country increases over a period of time. It is the rise in the general level of prices, where a given currency effectively buys less than it did in previous periods. In terms of evaluating the strength or currencies, and by extension foreign currency, inflation or measures of it are extremely influential. Inflation stems from the general creation of money. This money is m
Inflation is defined as a quantitative measure of the rate at which the average price level of goods and services in an economy or country increases over a period of time. It is the rise in the general level of prices, where a given currency effectively buys less than it did in previous periods. In terms of evaluating the strength or currencies, and by extension foreign currency, inflation or measures of it are extremely influential. Inflation stems from the general creation of money. This money is m
Read this Term
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