The Fed transitioned out of forward guidance on monetary policy and took great efforts to instill the notion that the Fed was now "data dependent" in deciding when to remove accommodation. While its reaction function may not be fully understood, the Fed’s mandate for 2% inflation and maximum sustainable growth are pretty clear.
Red December 2016 Eurodollar (EDZ6) trades flat on the day following the jobless claims data. Price action was muted yesterday, which is consistent with pre-employment report trade. Open interest rose modestly across the Eurodollar curve (+18K) but was slightly lower for EDZ6 (-2k). The yield curve flattened with the first three years falling 1.5 bps and the last three years rising 1 bp.
The Nikkei fell over 4% overnight and has lost 19% from its mid-August high of 20946. The chart looks devastated and bound for additional losses. The gap lower suggests selling strength and the break below the early September low offers similar conclusions.
It is entirely possible that U.S. equities put a "No" exclamation point on the chance for a September FOMC policy response. Right now, the S&P 500’s are trading near a trend line that has provided support, advancing from the Aug. 24 low. A settle below that trend line would likely collect some additional bearish sentiment. The repair since that late-August date has been inconsistent and modest.
In the grand scheme of things the Fed will not cause too many ripples on the cosmic screen of economic life by moving forward with monetary policy normalization at this (September 2015) FOMC meeting or by delaying that move.