Morning Report – Awaiting the FOMC 12/17/14

Markets are higher this morning on no real news. Bonds and MBS are down.

Oil continues to fall, with a barrel of West Texas Intermediate now down below $55 a barrel. This is putting pressure on prices. The Consumer Price Index fell .3% in November. Ex food and energy, it rose .1%. Will be interesting to see how the Fed addresses (if at all) falling energy prices in the FOMC statement.

Mortgage Applications fell 3.3% last week. Purchases were down 6.9% while refis were flat.

The FOMC will announce their decision at 2:00 pm. Expect volatility around that time and after as the press conference starts.

“A considerable time.” Sounds like a novel. Anyway, that is the phrase that will be the focus of the Fed statement. Will the Fed drop the language that states that rates will remain near zero for a “considerable time?” The new expected buzzword? Patience. Given how far bonds have moved to the upside already I don’t know how much a dovish statement will move them further. If anything the risks are on the downside.

4 Responses

  1. I agree with this. Good for the Obama administration.

    “U.S. and Cuba to Start Talks on Normalizing Relations
    By PETER BAKER and RANDAL C. ARCHIBOLD
    DEC. 17, 2014

    WASHINGTON — The United States will open talks with Cuba aimed at restoring full diplomatic relations and opening an embassy in Havana for the first time in more than a half century after the release of an American contractor held in prison for five years, American officials said Wednesday.”

    http://www.nytimes.com/2014/12/18/world/americas/us-cuba-relations.html

    Like

  2. Went to the Chinese place at the mall for lunch today. The help wanted placard had new stickers over the old starting wages and bumped them up 11%.

    I thought this would never happen without an increase in the minimum wage…

    Like

  3. “Chinese place at the mall for lunch today”

    sometimes you just need bad, greasy Chinese food.

    Like

  4. These trying times demand it.

    Like

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