Chris Rupkey Fed Quotations

The market is on guard after Broaddus reminded us that the day of reckoning when the Fed raises rates is drawing nearer and the rebound in global stock markets is adding fuel to the fire.

The Fed is still going to be on guard in terms of monitoring inflationary pressures, but this has to be good news today.

As far as energy prices and core consumer prices, so far it is all smoke and no fire. Rising energy costs have not yet fed into the costs of other goods, despite many anecdotal signs that prices are being impacted.

Prices received rising so much is the first sign that businesses have increased power to pass on these energy-price increases. Energy will shortly be a major factor in the inflation equation, and this is what the Fed is worried about, so expect policy makers to keep pushing interest rates higher.

I'm really more concerned that the economy is taking up slack resources. That could be a little bit worrisome. I think the Fed continues to raise rates.

Growth isn't fast enough that the Fed has to brake the economy, and at the same time it isn't slow enough that the Fed can stop and watch. Inflation pressures can still gain a foothold as the economy continues to take up slack resources.

Expectations of Fed action have gone though the roof. The market is looking for two 25-basis-point moves and one 50-basis-point move before the presidential election.

That leads to expectations that the Fed is still going with its series of rate hikes.

We're back to expecting a rate cut on December 11. Meyer changed people's thinking by essentially saying there's no limit as to how low (the federal funds rate) could go and today we're getting an added boost from the (weak) stock trade.

There is nothing at this point to suggest that Fed officials will pause.

The curve should be flattening if the Fed is assumed to be still tightening.

All eyes will be on the jobs report. The Fed is still worried with inflationary pressures, and may very well not be done with rates. But as long as the economy keeps growing without a substantial pickup in inflation, we may see bonds falling and stocks rising.