The hint about December FOMC meeting

·                    The hint which we were waiting today from the Fed came by the greenback side suggesting higher consideration of raising the fund rate for the first time, after keeping it unchanged between 0 and 0.25% since Dec. 16 2008.

·                    The Fed has chosen to cool the worries about the US economy because of the global economic slowdown saying merely this time that it will monitor the global developments, while the economy is running by a moderate pace amid balanced risks, after it said in September that the global developments may restrain the growth of the US economy.  

·                    The Fed has said also that it will keep monitoring the inflation developments closely expecting it to remain low over the near term before rising gradually over the medium term.

·                    The Fed has shown again that it is taking into its account the low inflation pressure which is "transitory" because of the low oil prices.

·                    Later in first quarter of next year, this low inflation situation can be different on elimination of the oil prices slide impact.

·                    The gap between the broad inflation figures and the core figures can get tighter within the first quarter of next year, as the oil prices could find support by the end of the first quarter of this year.

·                    The Fed has repeated again its appreciation of the housing market improving but it has seen this time slower jobs growth to be the most dovish point of this meeting economic assessment.

·                    While the most hawkish point in this meeting assessment was the Fed's adding that it will see next meeting "whether it will be appropriate to raise the target range or not"

·                    The greenback reacted positively across the broad supported by rising of the US treasuries yields because of the this sentence which raised the odds of hiking the interest rate by the end of this year.

·                     Overall,The Fed has tried to say that all of the options are still on the table and we are not away yet from raising the interest rate which is still considered even over the near term, if the economic data helped the Fed to move forward in the direction of tightening the monetary policy to be normalized policy again.

·                    We only want to see higher confidence in the jobs market in October or November and also  rising of the inflation from the current low level which is still persisting over the short term to provide a sign for rising over the medium term!   

·                    Anyways, there will be tomorrow the release of US GDP to acknowledge the moderate pace of growth and also there will be by the end of this week the release of Sep US PCE after rising by only0.3% y/y in August, July and also June.

·                    Before the focusing turning back on the US labor market next Friday with release of October labor report looking for adding higher number of jobs and stronger wage rising, after US labor report of September caused crucial change of the interest rate outlook, as it had shown adding only 142k jobs out of the farming sector in September, while the market was waiting for adding 200k, with down revision of August reading to be 136kfrom 173k in the first reading.

·                    While the monthly average earning per hour came unchanged and the market was waiting for rising by 0.2% following increasing by 0.4% in August to underscore again the weak inflation pressure which can be resulted from the wages too.