Greg Ip Trips Up the Bears

Greg Ip’s front page story in the WSJ today is getting credit for boosting the dollar and kicking off a slide in commodities and rallying the stock market.

An end to the Fed easing cycle should be no surprise, but keeping an eye on IP is mandatory if you are keeping tabs on the Fed.

The Federal Reserve is likely to cut its short-term interest rate by a quarter of a percentage point next week—but then may be ready for a breather.

The Fed, meeting Tuesday and Wednesday, is likely to make what would be its seventh cut in eight months. The reason: Some officials see a case for more insurance against a deeper recession.

Economists are weighing in on the piece, believing that it is material:

This is a major shift in market sentiment and has certainly helped give the USD a lift. Our view remains that the Fed will prove more aggressive than what is currently priced in as though inflation remains a key concern, recent releases have eased slightly and inflation expectations have yet to rise. Accordingly downward pressure on the USD should remain into the summer. However, we caution that with current market sentiment there could well be USD strength as we move into the April 30 Fed decision and it will most likely be the statement that will provide the clues as to if the Fed is anticipating a pause at the June 25th meeting. –Scotia Capital Global Research

Bears might want to respect today’s response, and price action, in the markets. They are cocksure of themselves, but had better pay heed.

I would love to see some type of global intervention later this year, with the Fed calling an end to the easing, and teaming up with central banks to pull a surprise in the currency markets. Trend followers might scoff at that possibility, but it would really put an end to some the speculation in the markets.

Although if we get al little more follow though today it might become unnecessary.

Econ Roundup: A Possible Pause For The Fed?
Real Time Economics

Fed Weighs Pause After Next Rate Cut
WSJ
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