The resolution the fed to raise interest rates tightening
cycle, currency how broken?
The federal reserve(Fed)Increases in interest ratesWill become reality.The fed in its latest statement released resolution rate 25 basis points.Lattice figure shows the fed expected rate could reach 1.375% by the end of 2016, which means that according to 25 basis points at the time of interest rates, the fed could raise rates next year four times, some analysts think the fed raising interest rates appear "hawks."
The dollarIndex on Wednesday (Dec. 16) edged up, volatile trading, after the federal reserve to raise interest rates for the first time in nearly a decade, traders think the federal reserve to raise interest rates for the future steps of the fed's hawkish stance on inflation forecast reaction.Despite a slight rebound, but the dollar failed to return after the federal reserve to raise interest rates decided to release soon hit a peak.
The federal open market committee (FOMC) raised its benchmark interest rate interval by 25 basis points, to 0.25% - 0.25%, over a decade, about whether the economy is strong enough, can cope with the rising cost of borrowing.
In a statement at the fed and the chairman of the federal reserveyellenAt a news conference after the speech, the dollar again and again, after the closeThe United StatesTurn up at the end of the trading session, as investors think the fed hinted in the next year to raise interest rates four times, each time by 25 basis points of progress as fast as the market had expected.
Analysts said that while the federal reserve to raise interest rates before schedule forecast and the forecast is consistent, but the market is expected to raise interest rates next year times less than the fed's expected, so the dollar edged up.EverBank World Markets President Chris Gaffney said, "from the perspective of the estimate of the end of next year interest rates, the fed's attitude to inflation stronger than the market."
The fed made clear that raising interest rates is just the beginning of tightening cycle "gradually", when deciding to raise interest rates next will focus on the inflation situation, the current U.S. inflation remains well below target.
The FrenchBNP paribasCurrency strategist at last said, "our interpretation is that the fed has already started tightening cycle, promote the speed of this round of cycle will be very slow, but the market digest path far milder than that of the federal reserve suggested".
Brown brothers Harriman chief strategist Marc Chandler thinks, the federal reserve this belongs to "hawk".Raising interest rates because of the lattice figure shows 2016 four times.And no one think shouldn't raise interest rates again.This is very important.This highlights the determination of the federal reserve's decision, there are three members think shouldn't raise interest rates before.
The federal reserve may raise interest rates next year 4 times
The fed as expected announced that starting from December 17 local time will be the federal funds rate increased by 0.25%, a new target for the federal funds rate remained at 0.25% to 0.25% range.
The fed said in a statement, monetary policy remains loose after the rise, the real interest rate paths will depend on the economic outlook anddataThe rhythm of the federal reserve to raise interest rates judgment is still "gradual" (gradual adjustments).
Lattice figure shows the fed expected rate could reach 1.375% by the end of 2016, which means that interest rates by 25 basis points/times, four times the federal reserve may raise interest rates next year, some analysts think the fed raising interest rates appear "hawks."
This is the first time the federal reserve in June 2006 to raise interest rates, also means that the world's largest economy officially entered the interest-rate increases.
Leave unused the federal reserve believes that the job market since 2015, "clearly resolve" earlier.Maintain long-term unemployment rate unchanged at 4.9%.Reasonable confidence to keep inflation rose to 2%.
The fed said in a statement, securities and investment will have been implemented due to interest rate normalization to obtain the very good implementation.Overnight reverse repurchase will only be limited to the national debt SOMA valuations, think that moderate economic expansion at the same time, the housing market improves.
The latest fed officials on the path for future rates expected "dot matrix figure", according to two officials should not be in 2015 is expected to raise interest rates.
In addition, the federal reserve's expected rate could reach 1.375% by the end of 2016, according to the rhythm of the 25 basis points at the time of calculation, means that the federal reserve may raise interest rates next year four times.Officials also showed that the expected value of the end of 2017, the interest rate will reach 2.375%, to 3.25% by the end of 2018, the two forecasting is 2.625% in September, down from 3.375% :
Lattice figure compared to September, the officials of the extreme hawkish stance decline, in 2016 at an annual rate of prediction value is 1.1375.
Market hot the fed to raise interest rates
DAN HECKMAN, US BANK of American investment consultant DAN HECKMAN said: "I think the fed will adopt a more hawkish stance during the first half of next year, after will become more moderate, is because the relations of time, when the election will come. In the second half of next year, the fed only see data significantly improved decision to raise interest rates."
"The fed's statement referred to many times the current inflation is still 2% below its set goals. Therefore, I hope to hear more about their perceptions of inflation, I think, she realized that the job market has started to tighten, if wages start to rise, should lead to a series of measures began to climb. If the energy market in the fields of rebound, from the perspective of the inflation situation could improve the speed of faster than the market expected."
Charles schwab, fixed income strategist KATHY JONES said: "the dollar edged up, bond yields up slightly, but not increase, so far, the market performance in line with expectations.
I think we can see, consistent with our expectations.A stronger dollar.I right bond yield curve steepened, rather than the flat, it may be that the decision makers of a part of the expected suggests that economic growth will slow.Is not slower than most people expected, but slower than some people expected.Of the yield curve steepened was small, but over the next few days, could become a flattening of the back.I'm dying to know what the fed perceptions of inflation, what is their plan.They think the inflation on the rebound?"
Chief investment strategist at JANNEY MONTGOMERY SCOTT MARK it, said: "I think the tone is softer, the statement by the fed several times in a statement, using the word" gradually ". I think that the fed's move is to want to make sure clearly communicate its policy intentions to investors, given the current and the desired data, the pace of this round of rate hike cycle not go very far. Therefore, market overall think policy statement, but in 4 PM before the close market will react, we will wait and see."
Basic and precious metals trading BMO CAPITAL MARKETS department director TAI WONG said: "the fed agreed to raise interest rates, and the tone mild statement, and the fed policymakers cut the forecasts on the economy, the gold market is trying to find direction, trading between $1063 and $1073. The market reaction to calm, indicates that gold prices rose above $1078 after earlier today, the most pessimistic short positions have been sold."
Energy consulting firm RITTERBUSCH AND ASSOCIATES founder JIM
RITTERBUSCH said: "because the fed's decision is expected today, so for crude oilfuturesLittle impact.Only the fed of unexpected decision, will affect the oil market."
Should buy the dollar now?
Yellen, chairman of the federal reserve (Janet Yellen) rate rise to global investors to buy dollars to open the green light, but because of the distance is less than two weeks at the end of time, watching and waiting is a strategy choice for the many investors -- about $13 billionThe euro/ dollar options expire this week, the positions of settlement of work will make the end of the yearThe marketBecome unpredictable.
BK Asset Management chief currency strategist Kathy Lien, tend to be in the euro/dollar 1.10 a line near the end of the short, but in dollarThe Japanese yenDown nearly 121.00 do more.Years dollars out of the steadily upward, as the years of the most important policy meeting become history, many investors will choose to take profits by the end of the year.
Kathy Lien on daily currencyResearch reportWrote:
Obviously, the fed's decision members did not frustrated by recent economic data back, to the us economic outlook remains optimistic attitude.In fact, they even raised economic forecast in 2016, at the same time lower the unemployment rate is expected.Members next year are expected to have four interest rate hikes, more
hawkish than the vast majority of market participants had expected, so this is not a "dove" yellen testimony of the positive hinted that the committee is not too worried about rising oil prices and the dollar's impact on inflation.
The dollar bulls are using these signals firm confidence, the close at hand over $a storehouse, investors may establish long positions to reconsider.
The only problem is, to do more than us $is already popular Trading market, according to a recent Commodity Futures Trading Commission (Commodity Futures Trading is appointed the published data, traders only slightly cut short the euro/dollar, and after the euro surged to do more than the dollar/yen.
Market over $warehouse is still very heavy, we tend to see the long before entering the reconstruction over $ebb tide, while the dollar bull market still and judgment will be further strengthened, but a lot of long dollar has felt exhausted, if they choose to take profits by the end of the year, we will be looking to buy.
In view of the currency moves after the federal reserve to raise interest rates, FranceSociete generale(601166,Stocks!Analysts think the euro/dollar is expected to end near 1.11, the next 1 to 2 months of trading range is expected to expand to 1.05 to 1.15 range.
The bank analysts added: "trade expanded adumbrative market uncertainty remains. Nevertheless, given the fed expected the unemployment rate will decline, we think that non-farm payrolls continue to grow, 204000 people will further prompt the fed the follow-up process to raise interest rates tend to lattice figure hint path, this will continue to help get a dollar. The euro/dollar is expected to eventually will fall to parity, but investors still need to wait."
Yuan how to cope with the federal reserve to raise interest rates?
Due to the contact of the global economy and financial markets increasingly close, China will inevitably impacted by the federal reserve to raise interest rates.Now, the fed is no action, China's reserves have shrunk to $500 billion,The yuanHas depreciated more than 7%.It is conceivable that capital flight and currency devaluation, will become the federal reserve to raise interest rates after the two major challenges China needs careful consideration.
The people's livelihood securityFixed income analyst teamGuanQing friendsAnd Li Jilin wrote recently, raising interest rates expected in easing of the people's bank of China and the United States, under the double extrusion of the spreads between China and the United States is narrow.Because now assets under the background of shortage, China can't use renminbi assets effect to make money as a hedge.Once spreads hangs, currency depreciation and capital outflows risk will rise.
GuanQing friend pointed out that the medium and long-term perspective, the federal reserve to raise interest rates will aggravate the yuanThe exchange rateThe devaluation of the pressure.Since 2014, into the era of two-way fluctuation of RMB exchange rate, but the fluctuations in the central in the falling.An average of 6.16 yuan against the dollar in 2014, has been exiled to 6.47 in 2015.In the next few years could continue to depreciate the yuan central.
According to theHuatai securities, the change of the Shanghai composite index shows that the federal reserve to raise interest rates lead to China's capital outflows,
existing in China's stock market is negative, but as a result of historical samples, history may be a coincidence, is not a causal relationship.
Citic securities, director of research at Ming, said the fed raising interest rates, central Banks under the background of "switched to keep", the policy rate and market interest rates will lead to pressure on renminbi assets are bearish.The people's bank of China, or will continue to maintain the stability of RMB exchange rate index, relative gradual dollar depreciation, interest rate and stable monetary policy unchanged.In capital outflows, foreign currency devaluation, at the end of liquidity will still or has the certain fluctuation, must still exists a certain probability.
Standard chartered bank (SCB) in London Asia head of currency strategy at Robert Minikin on foreign media said in a telephone interview, after the federal reserve to raise interest rates, the people's bank of China there is no need to take further on the foreign exchange market of the "big".
Standard chartered according to whether CFETS the index calculation method of the index have been found from the highs, according to the people's bank of China for the renminbi stable has significant efforts, policy there is no need to take "sudden action".
Minikin says, if the dollar to rise further, China's central bank is likely to allow the dollar /onshoreThe yuan rose to a near 6.50.
Minikin, points out that the current dollar /offshoreThe yuan/onshore renminbi exchange rate is far higher than the dollar, the people's bank of China trying to narrow rate, by the end of onshore/offshore rate is expected to meet near 6.50.Minikin finally pointed out that there are a lot of tools can affect the people's bank of China offshore and onshore renminbi rate.