In a 7-3 vote, the Fed held rates at 25-50 basis points. The FOMC Announcement was no surprise in this corner.

I did expect the Fed would trot out the word vigilance or imminent, or use similar language that would cause one to believe a hike was in the cards for December.

Nope. It was the usual lovey-dovey affair, albeit with three dissents coupled with a pseudo-hawkish warning after the meeting.

Case Strengthens Yet Again

Following the meeting, the Fed stated it “judges that the case for an increase in the federal funds rate has strengthened but decided, for the time being, to wait for further evidence of continued progress toward its objectives”.

Three Dissents

Voting for the FOMC monetary policy action were: Janet L. Yellen, Chair; William C. Dudley, Vice Chairman; Lael Brainard; James Bullard; Stanley Fischer; Jerome H. Powell; and Daniel K. Tarullo. Voting against the action were: Esther L. George, Loretta J. Mester, and Eric Rosengren, each of whom preferred at this meeting to raise the target range for the federal funds rate to 1/2 to 3/4 percent.

Laugh of the Day

Happy Days?

Gold and silver are up. Equities rallied sharply then started to drop in conjunction with bond market fluctuations.

Warning Sign?

In what could be a warning sign, the bond market action is interesting.

  • The 2-year treasury note yield is up 3 basis points.
  • The 5-year treasury note yield is up 2 basis points.
  • The 10-year treasury note yield is up 1 basis point.
  • The 30-year bonds yield is nearly flat.

Two-Year Bond Yield

2-year-yield-2016-09-21

Correlated Markets

Since that snapshot, bonds yields stabilized and equities rallied.

Stock and bonds are moving lock-step together.

Mike “Mish” Shedlock