MBS Day Ahead: A Potentially Eerie Realization About the Fed's Thinking

Posted To: MBS Commentary

MBS Live cornerstone Andy Pada reminded me yesterday that I was pretty sure the Fed was going to hike in September. Indeed, I was relatively passionate about the idea. MBS Live has a new and improved search feature, so I found the conversation in question, and it ends up serving as a good intro for today's thesis. The reason I was such a believer in the September hike was that I increasingly believed (and still do, to some extent) in the "dry powder" argument for Fed policy. For the record, this is a controversial topic and one that's looked down on by more than a few traditional analysts, but here's the gist: The Fed considers several different potential paths for the economy. One of the paths they must consider would indicate a downturn (or 'winter,' as the case...(read more)

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