Notice of Upcoming Lael Brainard Speech Sparks Treasury Selloff:Possible Implication of Fed Rate HIke

The Chicago Council on Global Affairs issued a press release announcing that Federal Reserve board member Lael Brainard, considered one of the most dovish FOMC members, would be speaking next Monday.

That’s just one day before the blackout period before the Federal Reserve’s September meeting.

“There’s a view that she may be going out to express some comfort with the idea of one rate hike this year,” says Gene Tannuzzo, portfolio manager at Columbia Threadneedle Investments. “The theory is that if she is far left of other members of the committee than it shows everyone else is at least as comfortable as she is.” Tannuzzo thinks September is on the table for the next Fed rate hike.

 Peter Hooper, chief economist at Deutsche Bank Securities wrote to clients Thursday:

It could be a coincidence, but it could also be an important opportunity for the Fed to raise market expectations and give the FOMC more room to maneuver at the September meeting. After San Francisco Fed President John Williams failed to budge the market with a fairly hawkish speech Monday evening, we assumed it would likely take an interview with Yellen to turn market...expectations about the September meeting around, should they seriously be considering a rate hike. . But this development re. Brainard has to place the probability very close to 50%.

-RW
(via Barron's)