by Calculated Risk on 1/04/2015 07:47:00 PM

Starting in 2009, there were always a large number of analysts predicting the Fed would raise rates very soon (not me) - until Bernanke and the FOMC stopped that speculation when they included the following phrase in the August 2011 statement: "The Committee currently anticipates that economic conditions--including low rates of resource utilization and a subdued outlook for inflation over the medium run--are likely to warrant exceptionally low levels for the federal funds rate at least through mid-2013."

That was eventually changed to "late 2014", and then to "mid-2015" ... now it seems likely the FOMC will raise rates this year. It has been a long long time!

From the WSJ: As Fed Prepares to Raise Rates, Economists Caution of Potential Bumps

“If we do it right, we don’t put the economy off-kilter,” said Federal Reserve Bank of Boston President Eric Rosengren . But “there are unusual conditions that I think complicate the normalization of rates this time.”

For instance, the current low level of long-term interest rates “indicates that there may be a bumpier ride, just because there needs to be an adjustment at some point along the cycle,” he said.

Still, Mr. Rosengren and others who spoke over the weekend at the American Economic Association’s annual meeting in Boston expressed relief that the U.S. economy has healed to the point where officials can seriously consider their first rate increase since 2006.

It is remarkable, said New York University economist Mark Gertler, that “after six or seven years, we’re finally talking about policy normalization, and it’s not a hypothetical conversation.”

Monday:
• Early: Reis Q4 2014 Office Survey of rents and vacancy rates.

• All day: Light vehicle sales for December. The consensus is for light vehicle sales to decrease to 16.9 million SAAR in December from 17.1 million in November (Seasonally Adjusted Annual Rate).

Weekend:
• Schedule for Week of January 4, 2015

From CNBC: Pre-Market Data and Bloomberg futures: currently S&P futures are down 14 and DOW futures are down 100 (fair value).

Oil prices were down over the last week with WTI futures at $52.69 per barrel and Brent at $56.42 per barrel.  A year ago, WTI was at $94, and Brent was at $107 - so prices are down 44% and 47% year-over-year respectively.

Below is a graph from Gasbuddy.com for nationwide gasoline prices. Nationally prices are around $2.20 per gallon (down about $1.10 per gallon from a year ago).  If you click on "show crude oil prices", the graph displays oil prices for WTI, not Brent; gasoline prices in most of the U.S. are impacted more by Brent prices.

Orange County Historical Gas Price Charts Provided by GasBuddy.com