Lead Capital Partners: The Federal Reserve will likely raise interest rates more quickly than investors currently believe, a top Fed official said in recent days. He reiterated his view that investors were taking a too pessimistic view of the US economy and bond yields were pricing in an overly dovish view of medium term interest rates.
Boston Fed President, Eric Rosengren was effectively repeating comments he made two weeks ago when he accused futures markets of only pricing in one rate hike in 2016. He took the latest opportunity to downplay weak 1st quarter growth, tepid consumer spending and weak industrial production and said the US economy is "fundamentally sound."
“We have no idea whatsoever which US economy Mr. Rosengren is looking at,” said a skeptical David Eckhart, chief market strategist at Lead Capital Partners.
Mr. Rosengren’s comments suggest that even the Fed's more dovish elements are ill-at-ease with growing skepticism over its ability to follow through with its promise to tighten monetary policy in the face of a global economic slowdown and anemic demand.
"While I believe that gradual ... rate increases are absolutely appropriate, I do not see that the risks are so elevated, nor the outlook so pessimistic, as to justify the exceptionally shallow interest rate path currently reflected in financial futures markets," said Rosengren, one of the voting members on the Federal Open Markets Committee (FOMC) this year.
"We can’t quite figure out Mr. Rosengren’s reasons for repeating these sentiments but they’re even more out of kilter with the real situation on the ground than they were two weeks ago. The US economy is not fundamentally sound and markets are pricing that fact in," said Eckhart.

About Lead Capital Partners:
Lead Capital Partners is an independent investment management practice founded on the philosophy that an active, opportunistic and adaptable approach to investing provides our clients with the best chance for the realization of long-term positive returns irrespective of prevailing market environments.
It is our firm belief that the “buy and hold” investment strategy that has traditionally served investors to such great effect over the decades can, now, lead to significant losses in bear markets, or to little or no profit in markets that persist in trading in ranges unless they are actively managed by seasoned professionals such as those at Lead Capital Partners.