‘I can’t remember a Fed meeting with so much anxiety’

“Are you freaking kidding me?” The trader at Raymond James and Associates on Park Avenue in New York couldn’t believe it when the headline flashed at 2pm New York time on Thursday once again, Janet Yellen was holding the line and doing nothing.

The Federal Reserve would keep interest rates near zero, continuing the easy-money era that began seven years ago.

On the crowded trading floor, every seat taken, the reaction to the most anticipated Fed Open Market Committee meeting in recent memory was, as one man in a crisp blue-striped shirt said in astonishment, “Wow.”

Whether traders were betting the Fed would act or not, they just wanted the wait to be over. The last time the target rate was raised was in July 2006, and since December 2008 it’s been near zero.

The government stimulus that started after the financial crisis as a boon to equity markets turned to a burden in recent months as a lack of clarity on, and a lot of fretting about, the Fed’s plan for liftoff loomed over stocks.

“I feel deflated,” said Mark Koczan, a trader at Raymond James. “It’s just more kicking the can down the road.”

As the clocked ticked down to 2pm at Oppenheimer on Broad Street in lower Manhattan, rows and rows of men and women chattered in nervous anticipation. There were shouts of “Buy! Buy!” and “We’re doing it before the decision!”

Then someone yelled, “20 seconds, 20 seconds!” And then, “Bam – no change! No change!”

Ten minutes later, Andrew Burkly, managing director of Oppenheimer’s portfolio strategy, leaned back in his chair and watched as the volume level in the room returned to normal.

“Everyone was sitting on their hands waiting, so now there’s a bit of disappointment,” he said. “I can’t remember a Fed meeting with so much anxiety.”

The traders at Raymond James had taken polls – a slight majority expected a hike -- and complained about how tough it is to predict what Yellen’s Fed might do.

“You don’t even know what to expect anymore, you have no idea if good economic news is bad news, if it’s good news or what,” one man muttered. Under Yellen, the Fed has deliberated over raising rates for more than a year, waiting for employment figures and inflation data to signal the kind of economic growth that meets their expectations.

Now there’s more waiting in store. “People want to get back to stock-picking,” said Dan McMahon, director of institutional equity trading at Raymond James. “It’s just 25 basis points. They’re not going to do December. October? What is going to change by then?”

Wall Street gave up a more than 1 per cent rally yesterday as investors struggled to interpret the Federal Reserve’s decision to hold off on raising interest rates.

The US central bank said global risks and other factors convinced it to delay what would have been the first rate hike in nearly a decade but it left open the possibility of a modest policy tightening later this year.

Investors’ focus turned to the next Fed meeting on October 27th-28th and they were still left to figure out the timing for the Fed’s first benchmark rate increase since 2006.

The three major US indexes all hit session highs, rising more than 1 per cent for a while during Fed chair Janet Yellen’s press conference.

Trading right after the Fed’s statement release was choppy with the major US indexes first hitting session highs and briefly turning negative before reversing course to positive again.

While some commentators said they were disappointed with the continued uncertainty, others showed relief.

Uncertainty about when the Fed will shift gears has dogged Wall Street for months – a situation that has been complicated in recent weeks by market turbulence linked to slowing growth in China and worries about the health of the global economy. – (Bloomberg/Reuters)