The Fed announced their plans today to “only invert the Yield Curve somewhat,” rather than the deeper and more extensive inversions some traders feared.
The minutes revealed a debate between the two camps: The Hawks wanted to invert the Yield curve extensively, while another, more dovish group only wanted to see the flat curve inverted more moderately.
UPDATE: January 4, 2005 6:13am
Front page WSJ article states "Fed officials are less worried about inflation and thus may be nearing an end to their campaign to raise rates, minutes of their December meeting suggest."
Joanie has a very different take on both the minutes and the markets reaction:
"I read it in its entirety. Quite boring, as a matter of fact; nothing new at all.
They say that the economy is on solid ground across the board, the only slight slippage mentioned at all was a mention of a bit of cooling in housing. Employment and output are right up there and inflation, of course, remains in check.
The minutes go on forever, rehashing a lot of stuff we have known for eons. Some think we need more tightening, but there is no consensus as to how much. Bottomline, they are monitoring the data carefully. And will act accordingly.
Look. We knew all that; a couple or so more and finito. I found the minutes totally uninspiring and lacking in any detail that is not already well hashed out in the press.
HOWEVER: The tape says that they were dovish.
But here’s the biggest question of all: It took me a solid 20 minutes to read that junk all the way through as it doesn’t quite read as easily as the Daily News. So can you please tell me how they put the pedal to the metal at precisely 2 p.m.? I mean, you couldn’t even get on the website to read it that fast.
Bottomline: Earlier, we came within .30 of putting in a Oitside Down Day. They rallied here because they could. The minutes are the excuse."
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The thing is, whether its momentary, or more lasting, an inversion is never a good sign, and one that surely fortells a general slowdown.
Posted by: DG | Jan 3, 2006 4:11:23 PM
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