FOMC Meeting: A Creature Is Stirring

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FOMC Meeting: A Creature Is Stirring

FOMC Meeting: A Creature Is Stirring by Zach Pandl, ColumbiaManagement

  • Last week’s news suggests that the center of the FOMC continues to see interest rate hikes in the middle of next year as most appropriate.
  • December 17 looks like a natural time to begin signaling the possibility of rate hikes to financial markets—an eventuality for which bond investors do not look prepared.
  • There are risks to making this change, but we suspect that Fed officials would favor a small hawkish surprise now over a large hawkish surprise later.

The November jobs report offered more evidence that U.S. growth has shifted up a gear. We are particularly encouraged that the gains in payroll employment were corroborated by other measures of real activity, such as surveys of business and consumer sentiment. Our proprietary indicator of U.S. growth has now increased at an annualized rate of at least 3% for nine consecutive months (Exhibit 1).

Exhibit 1: Persistent above-trend growth (% annualized rate)

Massif Capital’s Top Short Bets In The Real Asset Space [Exclisuve]

Screenshot 2022 08 10 18.57.51 1Since its founding by Will Thomson and Chip Russell in June 2016, the Massif Capital Real Asset Strategy has outperformed all of its real asset benchmarks. Since its inception, the long/short equity fund has returned 9% per annum net, compared to 6% for the Bloomberg Commodity Index, 3% for the 3 MSCI USA Infrastructure index Read More

Besides the jobs numbers, communication from the Federal Reserve last week also affected risks around the policy outlook. Four news items caught our attention:

1. Dudley continues to back mid-2015 liftoff date. New York Fed President Dudley said in a speech last Monday that a first rate hike in mid-2015 seemed “reas