Afternoon Must-Read: Tim Duy: Will The Fed Take a Dovish Turn Next Week?
...with the growing expectation that the Fed will take a dovish turn... global economic turmoil, collapsing oil prices, weak inflation, and a stronger dollar... pointing to rapidly rising downside risks.... Expectations of the first rate hike have been pushed out to the end of this year, seemingly in complete defiance of Fed plans....
[But] kind of a 'Fed is from Mars, markets are from Venus' situation.... My takeway is that the Fed sees the timing of the first rate hike as less important than everything that comes after that hike. This will leave them less eager to delay the hike... I suspect they see little chance of damage from that first hike alone.... I don't see how they can justify raising rates without some reasonable acceleration in wage growth... [but] perhaps... they can justify it on the basis of 25bp won't hurt anyone...
