Monetary Policy

The ECB is a month into what it has signaled will be at least an eighteen-month asset purchase program.  It had begun buying asset-backed securities and covered bonds earlier, but starting last month began buying sovereign and supranational bonds.  As...

As the stock market prepares to close later today, Yellen will deliver a speech on the new normal for monetary policy at a conference hosted by the San Francisco Federal Reserve, of which she was previously the President. The question...

Largely the Summary of Economic Projections, the infamous dot-plot, drove the dramatic reaction to last week’s FOMC meeting, which may still not be complete. This Great Graphic shows the latest iteration. What riveted the investors was the sharp reduction in...

The events of the past week will continue to reverberate in the capital markets in the week ahead. The key development was the market’s ultra-dovish read of the Federal Reserve. Although the dollar recouped the lion’s share of the knee...

The extremely dovish market reaction to the outcome of the FOMC meeting was more a function of the dot-plots than the FOMC statement or Yellen's press conference.  Methodologically, we have argued that the Federal Reserve is like the Chinese Communist...

The Federal Reserve met the widespread market expectations.  It dropped the word patience and recognized growth had moderated.  It wanted to see more improvement in the labor market and needs to be confident that inflation will move toward its target...

The Federal Reserve meeting is the highlight of the week.  The most pressing issue is the continued evolution of its forward guidance that will maximize the room to maneuver.  Until now, officials have indicated that they are in no hurry...

The most important event next week is the FOMC meeting followed by a press conference by Yellen.  In order to maximize its room to maneuver, we expect the FOMC statement will drop the patience that has characterized its forward guidance...

The euro finished last week three standard deviations below its 20-day moving average.  Even though the returns in the foreign exchange market are not normally distributed, this is a rare event, and reflected the stretched technical condition of the dollar...

The key fundamental fact that is shaping the investment climate was underscored last week.  The ECB announced that it will begin its accelerated asset purchases on March 9.  The following day the US reported a sufficiently robust employment report to...

ECB's Draghi failed to provide much fresh insight into implementation of its asset purchase program.  The details will be posted on the ECB's web site later.  The more important information comes from the ECB's new forecasts.  CPI this year is...

The ECB meets tomorrow.  We do not attribute any significance to its location in Cyprus.  A couple times a year, the ECB meets outside of Frankfurt.  The ECB meets tomorrow.  We do not attribute any significance to its location in...

The dovish take to Fed Chair Yellen's testimony yesterday has continued to weigh on the dollar and support global bond markets.  Equities are mixed with the major markets lower while emerging markets have rallied.  The MSCI Emerging Market equity index...

Bond yields and the dollar fell.  Emerging markets and equities performed well.  The main cause appears to be Yellen's testimony to the Senate.   Yet this seems to be an exaggerated response.  Going over Yellen's prepared remarks and answers to...

Testimony by Federal Reserve Chair Yellen is one of this week's few highlights.  Yellen's testimony is not about articulating a new policy, but explaining the existing policy to US Congress, and to some extent, the American people.  Testimony by Federal...