Saturday June 20, 2015 - 10:43:33 GMT
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Fed Lift-Off Timing Fuzzy: WEEK AHEAD
John M. Bland
Dovish Fed Surprise
The June 17 Fed meeting decision and Yellen press conference did not wind up with major surprises, but markets did not appear to be fully prepared for the tone of the Yellen press conference. While the Fed Chair reaffirmed that future policy decisions would be data-dependent, she also said that markets should not obsess about the timing of first rate hike. She emphasized that what matters most is the longer trajectory of interest rates will be gently sloping upward. After a night's reflection the markets took the view that the Fed's posture had become more dovish despite what appears to be an improving economy. Equities surged and the USD eased on this shift in sentiment.
Greece Tragedy Drags On
No one wants to see a Greek debt default, but the road to a solution remains difficult. The current drop-dead date is June 30 when Greece has payments due to the IMF that it does not now have the cash to meet. Discussions will likely come to a head in the week ahead when the the public posturings are over. The basic problem that is not being addressed is that without a major principal reduction, Greece is unlikely ever to be able to meet its existing debt obligations. Personally, I feel Greece would be better off if it could start over again with a debt write-down and a currency that it controls itself.
The upcoming week is a relatively sparse one for key economic data.
-- Monday, June 22, sees a holiday in China and key U.S. Existing Homes Sales data.
-- Tuesday June 13, features the release of global flash PMI Manufacturing and Service PMI data. The U.S. also sees Durable Goods Sales.
-- Wednesday June 24, Sees the closely followed German IFO Survey and an important U.S. 1Q15 GDP revision.
-- Thursday June 25, will see German flash June CPI, plus U.S. Personal Income and the PCE Deflator.
-- Friday June 26, sees the the final University of Michigan Sentiment Survey and the Monthly CFTC Commitment of Traders Report.
Be sure to refer daily Global-View to see the continuously UPDATED Economic Calendar and the Forex Forum for the complete list of key items (actual data, selected charts, etc.) as they are released.
John M. Bland
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