It's 2:00:01 pm and the Fed has just announced it will hike rates by 25 bps while using very dovish language to convey that just like "tapering was not tightening" in 2013, so "tightening isn't really tightening", and unleashing a massive buying order.
So far so good. But the real question is what does this mean for post-kneejerk market dynamics, and the one most important variable of all: liquidity.
Trying to remember what the world was like the last time the Fed hiked rates on June 29, 2006? Take a stroll down memory lane with DB's Jim Reid, for a quick reminder.
Submitted by Roger Thomas via Valuewalk.com,
If you’re an observer of the political aspect of the Fed policy, you’re likely aware that central bankers like to stay out of the spotlight. Spotlight creates political pressure, something Fed technocrats publicly dislike.
With this thought in mind, here’s a look at the federal funds rate overlaid with politics.
“The Fed is in total denial. It hasn't learned the lessons of what it put the world through a decade ago,” Stephen Roach said, back in January.
“I just go back to 2005 and 2006 where the Fed was so incremental in normalizing rates during a time of enormous froth in property markets, equity markets, credit markets and ultimately that led to huge distortions in the real economy and finally when the bubbles popped, the whole house of cards came down,” he added.
Submitted by Lance Roberts via RealInvestmentAdvice.com,
This week, the Fed will meet to decide the “fate of the universe,” as they are highly anticipated to announce the first rate hike in a decade. This is a momentous occasion as it marks the end of the “ultra-accommodative” monetary policy that has been the primary driver behind asset prices since the end of the financial crisis as shown in the chart below.