Certainly some interesting action out there of late. Two Fridays ago markets were up on the good employment data which signaled they were ok with a coming rate hike. Then they spent all last week digesting that news and selling off to the tune of the worst week since mid August. Today the Fed minutes indicated a rate hike is imminent ( “most” participants felt conditions for a rate hike “could well be met by the time of the next meeting”) – and markets were again happy with it. The action is a bit bipolar to say the least. The S&P 500 gained 1.62% and the NASDAQ 1.79%.
The minutes showed that many members of the Federal Open Market Committee believe a rates hike next month would be appropriate. “To me, the minutes were unusually clear,” said Jeffery Elswick, director of fixed income at Frost Investment Advisors. “They seem to be leaning toward a December rate hike.” “I think the market thinks [the Fed’s] going to be very dovish in its trajectory,” said Steve Blitz, chief economist at ITG Investment Research.
Also the Fed sent out the troops to give more guidance to the markets:
Richmond Fed President Jeffrey Lacker told CNBC that any economic effects from the Paris attacks should be temporary, adding that he still believes the central bank should raise rates. Atlanta Fed President Dennis Lockhart said the central bank should start raising rates now that financial markets have “settled down.”
In economic news:
On the data front, U.S. housing starts for October fell 11%, while building permits rose 4.1%. Single-family building permits rose 2.4% to their highest level since December 2007.