Fed’s Expectation of a “Soft Landing” for Rates is Wishful Thinking

yield-downExcerpted from NFTRH.com: The Fed’s recent worry that inflation isn’t high enough is simply another ruse for them to keep interest rates lower for longer, and even implement QE again whenever necessary.

It is summer slack season, with no FOMC meeting in August and so into the void go our friends in the mainstream media, with all sorts of noise to distract investors. Here’s one that was anticipated…

Fed should raise interest rates this year, Williams says

From NFTRH 406 (July 31), after the July FOMC meeting in which they fretted about inflation not being high enough (ha ha ha):

“Yes yes, I know the Fed does not see enough inflation yet. And that is just the point. They told us last week that there is not enough inflation and damned if they are not going to keep trying to promote it. It is also worth considering that while they will probably send various expectations managers to their assigned microphones, there is no meeting in August and there is a lot of room for asset price appreciation between now and September 21, per their wishes I assume (by their policy inactions and their inflationary words).

What they didn’t tell us is that they are not stupid (misguided in my opinion, but not stupid) and they know that something built on inflation (metaphor: a substance with opiate-like qualities) must have ongoing inflation (opiates) in order to keep the markets (metaphor: patient) stable. Withdrawal of these substances would mean a come-down and financial detox that would seem like hell on earth to those who think any of this is normal or organic in anyway (like a Keynesian intellectual, for instance).

The game of Whack-a-Mole is ongoing and institutionalized. It is an exciting time to bean investor a casino patron. But we need to be aware of things like the music stopping, how many chairs there are when the music stops and our own egos, bias and limitations.”

Mr. Williams, from the article; if giving an interview directly to the Washington Post is not expectations management, I don’t know what is…

“As the economy gets closer to its goals, we can again pull our foot off the gas a bit and hopefully execute a nice, soft landing over the next couple of years,” San Francisco Fed President John Williams told the Washington Post in an interview conducted this week.

The bond market just continues to call the Fed’s rates-rising bluffs, as investors pile into Treasuries despite record-low yields. The iShares Barclays 20+ Yr Treas.Bond ETF (NASDAQ:TLT) rose $1.60 (+1.15%) to $140.51 in Friday morning trading. The TLT, which is tied to long-term Treasury bonds and sees its price go up as yields go down, has gained 16.5% year-to-date.

TLT-2016-08-12

This article brought to you courtesy of NFTRH.com.

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