“The Fed is Still Tightening”

Over at Biiwii Steve Saville makes the case to clearly refute the Twitter mob instigators riling ’em up against the Fed’s dovish rollover.

What the Fed is Doing: Perception vs. Reality

Despite the dovish talk coming out the Fed’s collective orifice and despite the Tweeting rabble rousers and despite what the wise guys think over at the CME Futures (virtually no chance of a hike in June)…

Saville notes that “if the stock market extends its upward trend into May-June then the Fed probably will resume its rate-hiking in June.”

Of course, if the signals go the other way and the stock market dutifully tops out the relief rally the CME boyz will likely be right (no hike in June or beyond) because the  bond market will oblige, and as I belabor so much it makes your eyes bleed, the Fed will take economic and hence bond market signals seriously. If long-term Treasury yields start to rise with stocks again as they did in late summer, you watch how fast the Fed re-hawks.

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