Dudley: September Hike Less Compelling

William Dudley, the head of the NY Fed, said this morning that a rate hike next month is less compelling. I think the market is reading too much into this news.

The last few days have been a market event, not an economic one. I don’t believe the Fed is any less persuaded that it will raise rates soon. I’ve given up on predicting exactly when this will happen, but we know it will happen soon.

If you look at Dudley’s full remarks he clearly says that the data is getting better, not worse. This is not the kind of mini-panic where the Fed can rescue us.

Here’s a look at the six-month Treasury, which is one of the better charts to get a sense of higher rates.

The yield has climbed this year as the Fed has hinted that a rate hike is coming. The yield has dipped a little in the past few months, but not that much.

Posted by Eddy Elfenbein on August 26th, 2015 at 11:40 am

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