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Forecast on fed. fund rates
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newmoon
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05-Aug-2006 20:24
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Go to cnn business news for usa market-more accurate. The biggest bond fund manager in the world is putting his job on the line. |
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clauswu
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05-Aug-2006 17:41
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Copied from today's Financial Times: Will the Federal Reserve take its chance to step off the interest rate escalator? Futures markets, long unclear on Tuesday?s meeting, have decided interest rates will be put on hold after 17 straight hikes. Friday?s soft payroll number and rise in the unemployment rate from 4.6 to 4.8 per cent can be interpreted as more evidence of slowing growth. That fits with the Fed?s underlying view that growth is weakening and will bring down inflation gently from its elevated levels. That said, central banks are not always predictable. Only this week, the Bank of England shocked markets with a 25 basis point rise. And the US data by no means point unambiguously towards a pause. While growth is slowing, inflationary pressures continue to build up. Unit labour costs are likely to have risen by more than 3 per cent in the second quarter. Meanwhile, even yesterday?s jobs report was not as weak as it looked, with all the 113,000 new jobs created in the private sector. The Fed will have a lively debate. Jolting the markets with another rate rise would underline its inflation-fighting credentials, while arguably suggesting a lack of confidence in its own inflation forecasts. A hawkish pause is more likely ? making it clear the Fed is more worried about growth than inflation. But, if Ben Bernanke wants to avoid an over-exuberant market reaction, he will need to make it crystal clear that rates could yet rise again if inflation continues its upwards trajectory.
Conclusion: A pause is not yet certain, either way the markets will react strongly.
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newmoon
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05-Aug-2006 12:46
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PIMCO's Gross-manager of the largest bond fund in the world-Fed will definitely pause. Rally will continue like johnny walker on tired legs-business cycyle wii be prolonged . National day rally now probable. |
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