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Tag Archives: The Fed

Feb 16, 2018

How Will It End?

The Fed is raising interest rates, the yields on Treasury notes are climbing, the stock market just had a hyper-speed correct, VIX spiked and the inflation numbers are worrying.  Is there a message buried in all these data? Maybe not a clear message, but one sure thing and some hints.  The sure thing is that…


Jul 6, 2017

Inflation and the Fed

Despite today’s very low inflation the Fed keeps raising interest rates and is now discussing when to shrink its balance sheet to further tighten monetary policy.  The Fed’s own inflation forecast anticipates continued low inflation at 1.6% in 2017 creeping up to 2% in 2018 and 2019 and not seeing any increase later on. Moreover,…


Dec 1, 2016

The Turning Point

Thirty-five years ago on September 30, 1981 the 10 Year treasury yield peaked at 15.85%.  With a few bumps it has slid downward ever since – until now. The events of the last few weeks moved interest rates higher and added about 25 bp to the ten year treasury.  Even allowing for some near-term volatility…


Jun 6, 2016

Janet Yellen’s Message: Last Friday’s Employment Report Didn’t Change Much

Last Friday the markets were expecting to see May payrolls rise by something between 160,000 and 190,000 new jobs. Instead the report was an upsetting shocker with only 38,000 new jobs and a downward revision to the previous two months.  Stocks sold off at the opening, gold rose, talk of a fading expansion resumed and…


May 24, 2016

Inflation or Why Raise Interest Rates

The minutes of the Fed’s April 26-7 meeting convinced almost everyone that the Fed will raise interest rates at its next meeting in June, but left them wondering why.  Most of the subsequent discussion centered on the labor market and how close the economy is to full employment. There was also some whispering about inflation….


Sep 4, 2015

The Fed Puzzle Continues

Among analysts and Fed watchers, no matter what they expected from the Fed, they were all confident that this morning’s August Employment report would reveal the future.  No luck. If anything, the report had something, but not enough, for everyone. The increase in payrolls was 173,000, far below the 220,000 expected; the previous two months…


Aug 7, 2015

OK Jobs Report Gives No Hint for the Fed

Anyone hoping that this morning’s employment report would send a clear message to the markets and the Fed about the timing of a rate increase was sorely disappointed.  There is virtually no change from last month, even to the second decimal place on some lines. The charts show the unemployment rate — unchanged — and…


Jun 16, 2015

Looking Beyond This Week’s FOMC Meeting

The Federal Reserve’s policy makers, the FOMC, meet today and tomorrow (Wednesday) to review the economy and monetary policy.  The minutes of the April meeting and recent comments by various FOMC members point to no change in interest rate policy at this meeting.   Recent economic news is upbeat and the debates over the weak first…


Jan 9, 2015

Don’t Worry About the Fed

Money is often described has having four functions: store of value, unit of account, medium of exchange and a source of anxiety.  Investors reading about the FOMC minutes published earlier this week are focused exclusively on the last function worrying about what will happen when the Fed raises interest rates.  A glance at the last…


Aug 14, 2014

Double Dose of the Fed

Next week will be a double dose of Fed speculation and debate. First, on Wednesday at 2 PM the Fed will release the minutes from the last FOMC meeting on July 29th-30th.  Then on Thursday evening, Friday and Saturday the Kansas City Fed will hold its annual economic policy symposium in Jackson Hole Wyoming.   The…


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