One and done: Fed capitulates in June FOMC meeting

On June 15, the monetary body known for saying nothing, but revealing everything capitulated as Fed Chairman Janet Yellen virtually guaranteed that the momentous rate hike program the central bank laid out for the economy last October is over now, shortly after it begun.

To date, there has been only one minor rate hike in the past 10 years, and it was a paltry .25 bps that accomplished little last December before the invisible hand of the global financial system bitch-slapped the Fed into moving back onto the porch to try to yap at their betters.  In fact, the capitulation from the Fed Chair today was so concrete that even the central bank's bought mouthpiece Steve Liesman conceded that the cycle of rate hikes was over.

I think the first rate hike cycle is over. What Janet Yellen said in response to my question, and if you look at what has happened to the rate hike cycle, is pretty profound. It’s as close to the Fed getting to capitulation as I’ve ever seen, about the efficacy of Fed policy, about the outlook for the economy.

I just want to read this: “I think all of us are involved in a process of constantly reevaluating where the neutral rate is.” Basically they see these headwinds to the economy as becoming part of the new normal. This five-eights decline to the Fed Funds rate outlook for 2018 is pretty profound and GDP remained the same. That’s very important. And I am going to give rick a blue ribbon because Rick represents the markets. Rick - the markets won. The Fed has completely capitulated to the market’s point of view. The Fed is not leading the markets here, the markets are leading the Fed. Every single time.”


Perhaps not ironically, the markets barely moved on the news of no rate hike for June, and even the dollar lost just 60 bps when the FOMC results were announced.

In addition, probably the most stark reality that the hiking cycle has fizzled out is that every single one of the voting members on the FOMC stood unanimous in holding rates as they are despite four regional Fed Presidents going public just four weeks ago and assuring the markets that June was a 'live meeting', and that a rate hike was almost a guarantee.

Sadly however, any economist with half a brain and the ability to look at the full measure of economic data knew that June was not going to see a raise in rates, and that the chances were much better that rate drops would come from the Fed before the next rate hike.  And entering into the forecasted Summer of hell that Rob Kirby, Bill Holter, Gregory Mannarino, and Bo Polny have all predicted is now upon us, the likelihood of a new quantitative easing program being implemented before the November election is taking the place on Vegas betting boards as it formally replaces the odds of months of 'assured' rate hikes.