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"The Committee currently judges that there is sufficient underlying strength in the broader economy to support ongoing improvement in labor market conditions," says the FOMC cutting QE another $10B to $55B per month.
Updating its economic projections, the central forecast for headline unemployment at year's end drops to 6.1%-6.3% from 6.3%-6.5% expected last December. Core PCE inflation remains at 1.4%-1.6%.
13 of 16 members expect the first rate hike next year, with 10 seeing a Fed Funds rate of 1% or higher by the end of 2015.
Treasurys are taking hard the news of faster and sooner rate hikes, the 10-year yield up eight basis points to 2.75%. TLT -0.8%. Gold takes it hard as well, -1.9% to $1,334 per ounce. GLD -1.6%, but the dollar (UUP +0.6%) is higher across the board.
A check of Eurodollar futures finds nearly a full additional 25 basis point rate hike getting priced into the 2015 and 2016 contracts that wasn't there 20 minutes ago.
A check of asset markets following what's currently being interpreted as a strong nonfarm payroll report (175K jobs added vs. 154K expected; UE rate up to 6.7%): Flat ahead of the number, stock index futures are up by 0.5%; gold is down 1.1%, silver down 3.2%, copper off 2.9%; the dollar is up a bit, but mostly against the loonie after a weak jobs number in Canada.
A check of currencies amid the Ukraine military tension finds money flowing, but not flooding, into the greenback. The dollar is +0.2% vs. the euro (FXE), +0.1% vs. cable, +0.5% vs. the yen (FXY), flat against the swissie (FXF), and up 0.3% vs. the loonie (FXC). The reactions in stocks, commodities, and fixed-income are far greater.
The 10-year Treasury yield jumps to 2.92% following the jobs numbers beat and the far bigger-than-expected dip in the unemployment rate to just 7%. The government shutdown apparently affected this month's speed of decline in the UE rate, but not the level - i.e., it would be at 7% no matter the shutdown, but the furlough and then return of workers caused all of the decline to occur in the November report.
Stock index futures remain about where they were, the S&P 500 (SPY) +0.5%.
Gold (GLD) is off 1.25% to $1,216 per ounce and the dollar jumps, with UUP +0.5% premarket.
November's PMI read of 57.3 is up from 56.4 last month, and the highest print this year. Leading is a 3 point gain in New Orders to 63.6 and a 2 point gain in Production to 62.8. Supplier Deliveries curiously fell 1.5 points to 53.2 (drones?).
UUP +0.4% premarket as the dollar gains across the board behind the strong jobs print. The greenback is making its biggest move vs. the yen (FXY -0.7%), but is also higher vs. the euro (FXE -0.4%), pound (FXB), Swiss franc (FXF), and aussie (FXA -0.5%).
Boosted earlier in the week by a slow European inflation print, the dollar (UUP +0.6%) continues a nice run following a (barely) hawkish Fed Wednesday, and strong regional and national manufacturing data yesterday and today.
The biggest move has come against the euro (FXE), where ECB rate cut hopes arise after EU annual CPI came in at just 0.7% in October vs. consensus 1.1%. Core CPI of 0.8% fell from 1% previously. Pushing $1.40 and having the bears avoiding margin clerks one week ago, the euro now is buying just $1.3485.
The euro has risen above $1.38 for the first time since November 2011 and is +0.4% at $1.3817, with the dollar continuing to be dragged down by expectations that the Fed will delay tapering its QE program until next year.
Precious metals get their tails up following the disappointing September jobs number, with gold and silver moving from slightly in the red to higher by more than 1%. After falling to almost $1,250 per ounce last week, gold is back to $1,329. GLD +1%, SLV +1.5% premarket.
The dollar slips across the board. UUP -0.25% premarket. Up 0.4% vs, the dollar currently, the aussie (FXA) is particularly noteworthy. It suffered a brutal bear market this spring and summer, falling from $1.06 all the way to about $0.88 amid worries about a slowdown at home and in major customer China. It's been heading higher since around Labor Day, however, as the RBA signals a pause in its monetary easing campaign and as the growth outlook for China becomes less dour.