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Tag Archives: FOMC

Mar 18, 2022

Rising Rate Reflections

The Federal Open Market Committee voted to raise the Federal Funds rate by 25 bps on March 16, 2022. This move was well telegraphed and not at all surprising—but that doesn’t mean that we won’t hear concerns about how rising rates will impact equity returns. Finance theory teaches us that, other things equal, rising interest…

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Mar 8, 2022

No Easy Answer: Sector and Factor Responses to U.S. Rate Hikes

Although higher rates are generally seen as negative for risk assets, the initial stages of a monetary tightening cycle have not been disastrous for the U.S. stock market historically. However, while the overall market may muddle through just fine, the same may not be true for the different sectors and factors that compose a broad…

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Feb 28, 2022

The S&P 500 in the Years of Rate Hikes

Overnight rates in the U.S. are one of two major levers that the Federal Open Market Committee (FOMC) can pull to change the course of inflation and employment, the other being quantitative easing. At present, the market expects the Fed to move both levers in the near future: hiking rates and starting to wind down…

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Mar 25, 2020

Federal Reserve Becomes Buyer of Last Resort

In a previous blog, we discussed the U.S. Federal Reserve’s initial responses to the current market volatility and resultant dislocations. In short, dropping rates to 0% and adding over USD 1 trillion to the funding markets did little to abate the severity of the situation. In an effort to prevent a liquidity crisis from turning…

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Dec 18, 2018

Large Caps Lag In Rebounds

The entire U.S, equity market lost on Monday, Dec. 17, 2018, meaning every one of the 42 segments by size, sector and style finished negative for the day.  This was the second day in a row with losses across the board.  From Oct. 10-11, 2018 was the last time two consecutive days with all losses…

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Oct 24, 2018

Leveraged Loans in a Rising Rate Environment – Carry Factor Dominates

Since the end of 2015, the U.S. Federal Reserve has raised the policy rate eight times to currently 2.0%-2.25%. The minutes of the recent September FOMC meeting reiterated the committee’s positive growth outlook and confidence on 2% inflation. Market players continued to catch up on pricing future Fed hikes. Currently the market is implying approximately…

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Dec 22, 2016

Asian Fixed Income: Did the FOMC Affect Asian Sovereign Bonds?

The U.S. Federal Reserve recently announced a rate hike of 0.25%, while indicating more rate hikes are likely in 2017.  As of Dec. 21, 2016, the S&P U.S. Treasury Bond Index had lost 0.58% for the month, bringing its total return to 0.06% YTD, while its yield widened 27 bps to 1.75% in the same…

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Apr 7, 2016

Expect more starting and stopping at the Fed on Interest rates.

Given the FOMC minutes released yesterday we expect to see two rate increases in 2016. The next move is likely to be in June, not at the April 27th meeting. Some analysts blame disagreements within the Fed for what they see as inconsistent and changing policy.  While it is difficult to anticipate short term market…

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Dec 15, 2015

Countdown to Tomorrow

Tomorrow the Federal Reserve is expected to raise its benchmark Federal Funds rate by 25 basis points  — the first increase in seven years.   This increase, assuming that it comes, must surely rank among the Fed’s most advertised and anticipated moves ever, and Wall Street trading desks are ramping up in expectation of heightened trading volumes.   We have…

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Oct 30, 2015

The FOMC and GDP: Not As Confusing As It Looks

The statement issued by the FOMC, the Fed’s policy making unit, following its meeting on Wednesday sent a clear message that the central bank expects to raise interest rates at its next sit-down in December.  Thursday morning at 8:30 AM the Bureau of Economic Analysis published the advance estimate of third quarter GDP showing a…

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