Not exact matches
A jobs number miss will bolster the case that the Fed should wait to
raise interest rates until next year and perhaps calm
fears of wage
inflation.
That will have a double effect
of cutting wages and
raising unwarranted
inflation fears.
The Fed previously had signaled it plans to
raise interest rates two more times this year, but some observers have expressed concerns that the tightening monetary policy would accelerate over
fears of inflation.
Ahead
of that this morning we have CPI
inflation data,
fears of low
inflation coupled with a contagion from slow growing and even contracting foreign economies is exactly why we believe the FOMC will not remove the «considerable time» phrase in its statement when referring to
raising rates.
If the yield curve is expected to become flat, it
raises fears of high
inflation with the economy slipping into recession; with
inflation worries and recession
fears subduing each other, investors tend to take short positions in short - term securities and ETFs and go long on long - term securities.
Although the report was great news for U.S. workers, on Wall Street the rosy jobs picture generated
fears of higher
inflation that might drive the Federal Reserve to
raise interest rates more quickly than anticipated.
In the midst
of this the FOMC began
raising the fed funds rate higher and higher as they
feared economic growth would lead to
inflation, with rising long rates a possible sign
of higher expected
inflation.
These days the Fed seems more concerned about
inflation than recession and had
raised the federal funds rate to just over 5 percent as
of mid-2006 to head off what it
fears is a potentially overheated economy.