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RE: Yellen Feddles While Bitcoin Cruises
I'm convinced that the Fed is going to raise interest rates in Sept.
Ignore the market gyrations, they did that the same the last time the Fed hiked, and indeed when the Fed stopped QE - they are trying to panic Mrs Yellen into staying her hand. The idea is "See, look at the volatility, don't pull the trigger, it will get worse". She ignored them the last time, and she ignored them when she stopped QE
People have a lot of criticisms of the Fed, but they relate to Alan Greenspan's era. Mrs Yellen seems to be less spooked by markets than he was.
This is a key part of my point. Central bankers around the world are becoming pre-occupied with asset values and not just with monetary and financial stability which is their mandate.
I calculated the gyrations on August 25 - volatility high to low
USDCHF 1.73%
EURUSD 1.46%
USDJPY 1.90%
AUDUSD 1.87%
XAUUSD 1.83%
BTCUSD 1.31%
As to the timing of the next rate hike - in the good old days we never knew when they were coming. And then Ben Bernanke got spooked by market reaction to "I am ending QE" speech and started signalling. The truth is, the markets are already sending in the signals. The next chart is TED Spreads - the difference between 3 month interbank rates and 3 month Treasury bond rates. The uptick is clear - new high on December 17, 2015 (note this data from St Louis Federal Reserve is up to August 19 - they update weekly - check in a few days to see August 26 added).
Context is always important. This uptick looks very tame when taken over a 10 year view that includes the GFC. And ultimately the Federal Reserve will be well served not getting behind the eight ball when market rates accelerate.
The data is telling me September - I think the Feddler is too cautious.
Date from St Louis Fed https://fred.stlouisfed.org/series/TEDRATE - worth digging around at all the interest rate charts they offer. This is my favourite risk index as it shows a rate hike in September will not destroy the markets
https://fred.stlouisfed.org/series/BAMLH0A0HYM2?cid=32297