I am the one who knocks

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Market Loses Its Mind On Fed Obsession

in central banks/FX by

We wanted you to see just how silly this regime of granular central bank/ Fed analyses has become. This is from Bloomberg, out about a half hour ago:

“Odds of a Fed hike this year gyrated Friday but held mostly steady; market now shifts to Fed’s Brainard potentially clarify otherwise conflicted views of regarding pace of Fed of tightening.”
“Bloomberg WIRP function shows probability for Sept. hike at 32.0%; odds of Dec. hike 60.3%; these are little changed from yesterday despite today’s Fed speakers and volatile price moves in other markets”
“Brainard is the last Fed speaker prior to its Sept. policy decision and announcement; she is perceived as one of more dovish members of the committee”
“Fedspeak today split, with Rosengren backing “gradual tightening” while Tarullo called for patience to wait for more confirmation of inflation; Kaplan said rate hike case has strengthened in last few months”

We’re not only grading Fed speakers on some kind of bizarre hawkish/dovish rhetoric-o-meter we’re now losing our minds about a speech (Brainard) that hasn’t even happened yet. 

Now we’re down 300 points on the Dow, vol is spiking, and just like that everyone just lost their minds headed into the weekend. And all over a few things a few PhDs said. Why they won’t just stop talking is beyond us and we don’t mean that in a mean spirited or derogatory way. They’re clearly doing more harm than good and you’d think people as educated as they all are would understand that. The “quiet” period ahead of the meetings needs to be made perpetual.

Have a look at “fear” and the dollar on the day:

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So there’s a market implied 32% chance of a hike this month and that’s enough to trigger the above? If we told you there was a 32% chance of rain, would you even bother bringing an umbrella?

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