“The higher that rates go from here, the more the bond market needs to respond to them. The bond market should finally respond to upward pressure on long-term rates.”
“This is a Fed that has demonstrated excellent crisis management skills. But by the time we come to November, the Fed should be able to act with a greater degree of confidence. A pause in November would mean a severe downgrade in the prospects for the economy while tightening in November would show that the effects of Hurricane Katrina were probably temporary.”
“The November minutes were taken as a sign of an impending pause and I don't think the Fed wants to give that message. If the economy is still growing fast, they may have to raise rates above 5 percent.”
“This was a disappointing number relative to expectations and certainly consistent with the idea that consumer spending is going to be a much smaller contributor to economic growth in the fourth quarter.”
“I think the Fed keeps going as long as GDP growth stays between 3 percent and 4 percent. That would be not too hot to make them go faster or too cold to make them pause,”
“There's now a possibility of a pause whereas last week I would have described the thought as lunacy. But this does not necessarily portend a pause, ... The Fed will be busy in the next two weeks to come up with as much hard information as to the size and duration of the hurricane effect.”
