FED minutes released and the market doesn't care!

Weekly FED watch - FED minutes released and the market doesn't care!

 

A muted reaction the FED minutes release today, if you could even call it a reaction!
the EURUSD rallied all day up to that point and had a slight wobble on the release. nothing out of the ordinary though.

the remarks during last months meeting seem pretty even handed, with a few members stating that they are open to moderate rate rises starting sometime soon,
Read into that what you might, but it seems that the ship will stay on course for now.
One point of note. the word 'GLOBAL' was mentioned 22 times throughout the minutes. it seems that the FED is willing to reach further and further afield for an excuse to hold down rates.
I think we could insert the word CHINA for the word GLOBAL and the whole release might read clearer.

 

The implied probability of a rate hike this month has dropped to almost nothing as you can see above.
Traders have taken the idea of a rate hike off the table totally.

I think we can say that if there is any downward move in the stock market over the month of April then any talk of a rate rise will be banished from the meeting, see quote below.

Translation: Don't worry we will not UPSET the stock market!
We also had the crude inventories release today which came in with a surprising turnaround
"U.S. commercial crude stockpiles fell by 4.9 million barrels to a total of 529.9 barrels in the previous weak, the Energy Information Administration said. Data from the American Petroleum Institute showed on Tuesday that U.S. crude oil inventories fell by 4.3 million barrels for the week to April 1. Analysts polled by Reuters had forecast a build of 3.2 million"
Crude prices jumped on the news up almost 5% at one point. this stead climb might force the hand of the FED in next months meeting when they take into account the affect it will have on inflation. We will see.

 

 

Looking at probabilities for the rest of the year, I see that markets dont believe FED anymore. All probabilities were downgreaded for all FOMC meetings this year. Each meeting has been downgraded for few consecutive weeks now. Will Yellen recover the confidence tomorrow?

Visit FED WATCH to see longer trends in implied probabilities

April is priced @ 3%. This is down from 5% prior week.
June is priced @ 22%. This is down from 30% prior week.
July is priced @ 35%. This is down from 43% prior week.
September is priced @ 48%. This is down from 50% prior week.
November is priced @ 46%. This is down from 54% prior week.
December is priced @ 56%. This is down from 65% prior week.

All meeting are now priced at max 56% ( Decemeber) Is it enough?