From the Port Phillip Insider (Australia) –
Overnight, the Great Manipulation continued. As reported by Bloomberg:
‘Federal Reserve Governor Lael Brainard has just released a post-crisis monetary policy manifesto aimed at defusing any urgency to raise interest rates. For this month at least, the Federal Open Market Committee might agree.
‘Brainard, in a speech Monday in Chicago, says this means there’s no reason to rush to raise rates because right now there seems little need to lean against an overshoot of inflation or employment. It’s an argument that will probably be persuasive when the FOMC meets on Sept. 20-21. Her remarks are the last ones in public from a Fed official before the central bank enters its pre-meeting quiet period.’
After this nifty bit of manipulation, the Dow Jones Industrial Average gained 1.3%, winning back some of Friday’s losses.
And as you’d expect, the yield on US 30-year Treasury bonds fell. At last count, these bonds yielded 2.36%, down from 2.41% before Ms Brainard’s comments.
And to show that the market doesn’t do anything these days without considering the actions of the US Federal Reserve, the probability of a rate increase this month now stands at 22%.
On Friday, there was a 30% probability of a rate increase.
So on it goes. We shouldn’t be so surprised. The Fed has been manipulating interest rates for over 100 years. Why stop now?