Searching for Equilibrium
The Federal Reserve modified its stance yesterday without changing rates. It is not just about how fast the Fed sees itself normalizing monetary policy but also where the level of the equilibrium rate. The Federal Reserve modified its stance yesterday...
Now Can We Expected a Slower Tightening Cycle?
The Federal Reserve anticipated a more gradual tightening path going forward. This weighed on the dollar and lifted equities. August Fed funds futures imply less of a chance of a hike next month. It is now consistent with an 8% chance...
Japan’s Kuroda and the BOJ are in a Corner
Following today's FOMC meeting, the central banks of Japan, Switzerland, and the UK meet tomorrow. The SNB will keep its powder dry to be able to respond to the results of the UK referendum if needed. The Bank of England...
Your FOMC Primer
The FOMC meeting later today, with updated economic projections and a press conference, is the key event of the day, even though three other central banks meet over the next 24 hours. Investors should know four things before the FOMC...
It’s All about the Fed…and other Central Banks
A couple of weeks ago, the four central banks that meet in the coming days were thought to be a big deal. Numerous Federal Reserve officials were preparing the market for a summer hike. Risks of a new downturn in...
When Unconventional Monetary Policy Becomes Conventional
One of the most significant new developments in the global post-global financial crisis (GFC) economy is the enormous asset purchase programs implemented by central banks in the industrial world to stimulate their economies. Widely known as quantitative easing (QE) programs,...
Can the Fed Hike Rates in an Election Year?
The most important element in next week's FOMC meeting may come from the dot plot and whether the Fed officials are backing away from the two hikes thought appropriate in March. When looking the schedule of FOMC meetings, and understanding...
So Now the ECB is Buying Corporate Bonds
In March, the ECB decided to increase its asset purchases from 60 to 80 bln euros a month and to include corporate bonds. The corporate bond-buying program begins this week. We use an FAQ format to discuss the key issues....
June or July Now Looks Like July
Through the first part of the year, the swinging pendulum of expectations for the trajectory of Fed policy has been a major driver in the foreign exchange market. This is true even though the ECB and BOJ continue to ease...
Does it Matter When the Fed Raises Rates?
The US dollar lost momentum yesterday but has regained it today. The euro has been pushed through last week's lows near $1.1180. The next immediate target is $1.1145, which corresponds to the lower Bollinger Band today, though the intraday technical...
Interest Rate Differentials Widen and the Dollar Benefits
The US dollar’s weakness in recent months, despite negative interest rates in Europe and Japan likely had many contributing factors. These factors include shifting views of Fed policy, weaker US growth, the recovery in commodity prices, including oil, gold and...
Not Seeing the Leadership for the Minutes
We felt strongly that the FOMC minutes would be more hawkish than the statement that followed the meeting, and we were not disappointed. However, our caveat remains the minutes dilute the signal that emanates from the Fed's leadership, Yellen, Fischer,...
And Now for Something Completely Different
The Great Financial Crisis has exposed a deep chasm in economics and economic policy. In no single institution is this crystallized more than at the Bank of Japan. The former Governor, Shirakawa brought policy rates to nearly zero to combat...
But What if You’re Already Using Unconventional Monetary Policy?
On 29 January 2016, the Bank of Japan (BoJ) announced its monetary policy for the New Year: quantitative and qualitative monetary easing with a negative interest rate. The policy came as a surprise to money markets. The Nikkei index went...
Memo to the FOMC: Stay in Your Lane
This Great Graphic was posted by Hale Stewart on Seeking Alpha. It draws on US government data to show the increase in the median asking rent for vacant units since 1995. There are other measures of rent, including rent on...