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Oct 29, 201510:29 AMOpen Mic

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We have Fed lift-off? Not so fast

This week, the U.S. Federal Reserve was widely expected to leave interest rates unchanged at the conclusion of its meeting. While market-based estimates of Fed lift-off point to low odds of a rate increase this year, we, along with many economists, expect the Fed to raise rates at its December meeting. The key will be for economic data to generally improve.

A contributing factor would be rising wages in this week’s third quarter Employment Cost Index report. Beyond this week, we would look to an uptick in inflation data next month and solid employment reports for October and November.

The U.S. political front also remains an important factor in Fed lift-off. If Congress fails to lift the debt ceiling and fund the government in a timely manner, market dislocation could delay lift-off. We believe the likelihood is low that the U.S. government will fail to raise the debt ceiling or pass a budget.

Easy monetary policy continues to be the main feature of the rebound in the global equity markets. European Central Bank President Mario Draghi indicated the central bank is likely to expand its quantitative easing program in December. Also, ahead of this week’s annual central party meeting, authorities in China reduced interest rates to support economic activity.

For more information, please go to: https://reserve.usbank.com/insights/market-economic-update.

Robert L. Haworth, CFA, is a senior investment strategist and Darrell Behnke is the Madison market leader for the Private Client Reserve of U.S. Bank.

This information represents the opinion of U.S. Bank and is not intended to be a forecast of future events or guarantee of future results. It is not intended to provide specific advice or to be construed as an offering of securities or recommendation to invest. Not for use as a primary basis of investment decisions. Not to be construed to meet the needs of any particular investor. Not a representation or solicitation or an offer to sell/buy any security. Investors should consult with their investment professional for advice concerning their particular situation. The factual information provided has been obtained from sources believed to be reliable, but is not guaranteed as to accuracy or completeness. The organizations mentioned in this publication are not affiliates or associated with U.S. Bank in any way.

Past performance is no guarantee of future results. All performance data, while deemed obtained from reliable sources, are not guaranteed for accuracy. Indexes shown are unmanaged and are not available for investment.

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Oct 29, 2015 04:03 pm
 Posted by  Anonymous

The Fed is more likely to announce a new round of QE than to raise rates. The "cooked" numbers coming out of the government are so disconnected from reality that at this point nobody with 2 brain cells to rub together believes them anymore. You can google past US Bank blog posts (I saw one from 2010) and they were talking about the Fed raising rates back then too. The truth is that the US economy and the world's economy have never recovered from the crash of 2008. We are in a world-wide depression that has been papered over with zero-interest rates and quantitative easing. The fundamentals (whose measurements are manipulated by the government) are worse today than in 2008. The economy that this writer studied for so many years and understood so well died in 2008. Ever since then he has been following the "fake it till you make it" strategy. So sad. We are living in strange times my friends. If you want to know what's going on, I mean really know what's happening with our economy search on YouTube for "Andy Hoffman" or "Gerald Celente" or "John Rubino" or "USAWatchdog" to get the real news. This article is nothing more than government propaganda.

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