I'm not sure if we've sort of formalized how this goes: do we keep discussions in the comments or do you do a new Ello responding to another Ello? I suppose this will depend.
And so on.
@boes_ has a good post up this morning about Fed rate hikes and how far the Fed is likely to be able to take the Fed Funds rate once it begins tightening. Matt looks at the flatness of the yield curve, which is basically saying we're at the beginning of a tightening cycle, not ten months away from one.
The other upshot of Matt's analysis is that once the Fed starts raising rates, they won't have very far to take them. This, to me, is the really interesting discussion, and one that has sort of been pinging around in various forms for a while.
It can be based on looking at the yield curve, or as Gerard Minack did in BI's latest Most Important Charts feature, looking at where FF peaked ahead of US recessions.
And there are other ways of making this argument, too.
But recently, there has been more and more noise from Wall Street economists that tightening is coming sooner rather than later, and that the Fed has made a clear shift in focusing on the strength in the labor market rather than worry about still-below-target inflation. And I know this is sort of a simplistic way to view it, but look across the UST yield curve, and like, there's basically no belief the Fed is doing anything. (Ever?)
Fed futures are implying either a Sept or Dec '15 rate hike (not sure, might be the latter), and as Matt highlighted in his post as well, Morgan Stanley's months to rate hikes index is at 10. So, September.
And look, I am not as smart as the people who are talking about this stuff and I have no formal training in the economic impacts of monetary policy, but I know how to read and interpret language, and right now something seems out of whack.
As @schawel noted this morning, suddenly Jim Bullard has flipped from "We need more to QE" to "We need to talk about raising rates" and while Bullard is definitely the subject of a separate post, the idea that people who determine monetary policy move around their conceptual frameworks on the future course of policy like a bond trader isn't too soothing.
All I know is that when I see GS and other shops writing about "base case" scenarios where FF is at 4% in 2018, I feel like I'm not looking at something that makes a whole lot of sense.