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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory

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From: CalculatedRisk7/18/2006 10:34:36 AM
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Fed Watch: Living on a Knife Edge
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Living on a Knife Edge, by Tim Duy: Big, big week for monetary policy. Today, we get the PPI figures. Tomorrow, Fed Chairman Ben Bernanke marches up to Capitol Hill for his Congressional testimony after getting a fresh reading on inflation earlier that morning. Unless the inflation numbers surprise on the downside, I am not confident that with oil staring at $80 a barrel, Bernanke can stick with a message that suggests inflation is under control. At the same time, with clear evidence of a slowdown evolving in consumer spending and a housing sector that is clearly on the rocks, Senators will want to hear that Bernanke is pulling his foot off the pedal. Financial markets are split pretty evenly between expectations of another hike or a pause next month; tomorrow’s events could shift the tide decisively in one direction or the other.

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