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The Key To Predicting Future Fed Moves Is To Keep Your Mind and Eyes Open

22 Years ago | February 17, 2019 3/22/23, 12:00 AM

John M. Bland, MBA, co-founder,

Focus On Where Central Bank Policies are headed In Medium Term In my opinion, the Powell Fed was too fast to send a dovish easing signal to the markets in January as a run of softer U.S. data got investors worried that the economy was in for an economic slowdown. Well, just as soon as the Fed signaled an easier monetary policy, a number of economic statistics indicated that the economy might have stabilized and could now even be strengthening. I applaud the new Fed Chair’s attempt at clarity, but feel he could be more effective if he was a bit more cautious when discussing future policy. Economic forecasting tends to be about as accurate as predicting the weather. There is no point in trying to predict the unpredictable. Markets do not benefit from a clear definitive forecast which is wrong. There is nothing wrong with saying a given forecast is uncertain. Central banks can do more for the markets by highlighting the current uncertainties of the markets and letting the markets know explicitly what will tip their next decision either way.

Currently, I see U.S. employment and inflation data as the critical factors for Fed policy. For now, until proven wrong, I see U.S. employment data as strong, however I do not see a reliable relationship between inflation and jobs. My bias is for a risk of higher rates if U.S. job markets remain strong. I take the market one day, or data release, at time and suggest traders focus more on the BIAS of interest rate markets rather than focus on single point interest rate forecasts (“dot plots”) because they are destined to be wrong. Forex markets depend heavily on prospective future moves in interest rates.

GVI Trading. Potential Price Risk Scale
AA: Major, A: High, B: Medium

Mon 18 Feb 2019
A US- Holiday
Tue 19 Feb 2019
A 09:30 UK- Employment
A 10:00 DE- ZEW Survey
Wed 20 Feb 2019
AA 19:00 US- Fed Policy Minutes
Thu 21 Feb 2019
A all day Flash PMIs
A 01:30 AU- Employment
A 13:30 US- Weekly Jobless
A 13:30 US- Durable Goods
B 10:00 US- Leading Indicators
A 16:00 US- EIA Crude
Fri 22 Feb 2019
A 09:00 DE- Ifo Survey
A 10:00 EZ- Final HICP
AA 13:30 CA- Retail Sales

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