Ed’s Daily Notes for June 17th   Leave a comment

Daily Mail: Obama announces 275 US troops WILL be sent to Iraq to protect American embassy in Baghdad days after saying they would not return

President Obama announced on Monday evening that US ground troops ‘equipped for combat’ are being sent to Iraq – just days after claiming that no American soldiers would be deployed to the war-torn country.

In a letter to Congress, the president said American troops will be returning to Iraq only three years after they left and their deployment began on Sunday.

Obama said that their only purpose will be to protect U.S. personnel and the embassy in Baghdad – and not to join in the fierce fighting raging outside the Iraqi capital.

The president did tell Congress, however, that American military personnel in Baghdad will be ‘equipped for combat.’

I guess he learned his lesson from Benghazi?

Sarcasm aside, this isn’t the “U.S. riding to the rescue” that the markets are wanting (although 275 U.S. troops could be enough to put an end to the ISIS group threatening Iraq). This is almost a non-story.

Bloomberg: Fed Will Raise Rates Faster Than Investors Bet, Survey Shows

The Federal Reserve will probably raise its benchmark interest rate faster than money-market investors expect, according to most economists surveyed by Bloomberg News.

Eurodollar futures, the world’s most actively traded short-term interest-rate contract, are underestimating the pace of tightening over the next two years, according to 55 percent of 56 economists in the June 12-16 survey. Fed officials begin a two-day meeting today in Washington.

Investors in the contracts are assuming a slower pace of rate increases than the Fed itself, said Conrad DeQuadros, senior economist at RDQ Economics in New York. They may also be overlooking recent reports showing the world’s largest economy is gaining strength after contracting in the first quarter, he said.

“I find it kind of odd that the market is not even priced for the median forecast the Fed has delivered,” DeQuadros said. “There is going to be an adjustment upward.”

Options on Eurodollar futures contracts show a 47 percent probability the Fed’s benchmark rate will be 0.75 percent or lower at the end of 2015. The odds that the rate will be 2 percent or lower by the end of 2016 are 54 percent. Eurodollars trade in price terms while the implied yield is derived by subtracting the contract price from 100.

In March, officials predicted the fed funds rate, now between zero and 0.25 percent, would rise to 1 percent at the end of next year and 2.25 percent at the end of 2016.

It always worries me when the Fed thinks one thing, while the markets think something else. Either the Fed has to change it’s thinking, or…bad things happen.


Posted June 17, 2014 by edmcgon in Federal Reserve, News, Politics

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