The WSJ's Jon Hilsenrath -- whom Cardiff Garcia has dubbed "Fedwire" -- reports that more Fed action is now officially on the table due to the slew of weak incoming data.
There's no gaurantee that it will happen, or that if it did happen it would be at the June 20 meeting, but the presses are being warmed up.
Meanwhile, Jefferies David Zervos gives his take on the key levels to watch for more Fed action:
There's no gaurantee that it will happen, or that if it did happen it would be at the June 20 meeting, but the presses are being warmed up.
Top Fed officials have said that they
would support new measures if they became convinced the U.S. wasn't
making progress on bringing down unemployment. Recent disappointing
employment reports have raised this possibility, but the data might be a
temporary blip. Moreover, the Fed's options for more easing are sure to
stir internal resistance at the central bank if they are considered.
Their options include doing nothing and
continuing to assess the economic outlook—or more strongly signaling a
willingness to act later if the outlook more clearly worsens. Fed policy
makers could take a small precautionary measure, like extending for a
short period its "Operation Twist" program—in which the Fed is selling
short-term securities and using the proceeds to buy long-term
securities. Or, policy makers could take bolder action such as launching
another large round of bond purchases if they become convinced of a
significant slowdown.
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