Business

In her first post-rate-hike press conference, Janet Yellen is about to go to extreme lengths to explain just how dovishly bullish raising interest rates is, despite leaving the Fed Funds forecast unchanged since September (i.,e. not dovish). We look forward to her explaining why she is raising rates now - as opposed to September - as economic data has nosedived and the market has done a significant job on contracting credit already. We also look forward to her explaining how, if rate hikes on the path to normalization are so awesome, why is the willingness to do it so low?

Well, liftoff has officially begun. 

Assuming 25 bps doesn't tip EM into crisis and/or trigger some kind of dramatic, unforeseen meltdown elsewhere, the Fed is about to embark on the first rate hike cycle in over a decade. 

Of course the hike itself isn't what's interesting - virtually no one thought the Fed would fold again, even as China did its best to create a bit of pre-Yellen drama by stirring up the deval fears with a nod to a new trade-weighted index for the yuan.

On the 7th anniversary of entering ZIRP, and for the first time since June 29th 2006, The Federal Reserve announced today that it will try and raise interest rates:

*FED RAISES INTEREST RATES 0.25 POINT IN UNANIMOUS VOTE

Of course, the flowery language and dots are as dovish as possible while maintaining some semblance of credibility with regard growth expectations as The Fed unleashes a tightening cycle for the first time in over 11 years.

Summing up the anxiety ahead of today's Fed decision - which talking heads just this morning explained is "priced in" and is a "non-event... been so telegraphed" - market professionals believe "it seems a good time just to go and beat the crap out of a punchbag." As Bloomberg reports, real traders say they "just don't want to do any damage today," as they trade around the events, "I think we're going to see a lot of volatility," and Treasury risk is already spiking to 5-month highs.

Submitted by Martin Armstrong via ArmstrongEconomics.com,

The argument that the Fed should do nothing - for it will be harder to correct a rate rise than to do nothing - because there is no bubble anywhere, demonstrates that we have the most serious BUBBLE in history. Retail participation in markets is still off by 50% from 2007 highs. People have invested in fixed income and now there is a crisis is fixed income hedge funds.