Wall Street is having a tough time determining how large the Fed's SOMA portfolio will be at the conclusion of quantitative tightening. Likewise, estimates vary on how much accomodation is being removed via balance sheet reduction.... Read More
The Fed is expected to hike next week, but some uncertainty exists. Assuming they raise rates, only one further hike is priced in for the rest of 2019.... Read More
The Fed has stated the stock market does not influence policy. However, the "Powell Put" could be tested as early as today should stocks break lower to their biggest correction in nearly three years.... Read More
It has been a while since a newswire story signaling a potential change in Fed policy affected markets. But, yesterday's report that the Fed is weighing a "wait-and-see" approach did just that.... Read More
Yesterday Jerome Powell changed his tune in saying the funds rate was "just below" neutral rather than "a long way" from neutral. We believe lower inflation expectations are the main reason for this change of heart.... Read More
The BOJ's balance sheet recently grew bigger than Japan's GDP.... Read More
All signs continue to point toward a hike next month. However, uncertainty about rate hikes after that are increasing.... Read More
Neither economic data nor stock market prices are likely to change enough prior to the December 19 FOMC meeting to force the Fed to rethink its planned hike.... Read More
FOMC statements in the Powell era remain short and to the point.... Read More
Talk is rampant that the Fed could cut Interest on Excess Reserves (IOER) by five basis points to better align the effective rate in the middle of its range of 2.00% to 2.25%. The Fed is not entirely sure why IOER has drifted to the upper end of the targeted range, but increased bill supply is one suspect.... Read More
An update of the Fed's balance sheet reduction... Read More
The fed funds futures market is fairly certain of a hike in December. After that the picture becomes less clear.... Read More
FOMC statements are becoming shorter and easier to understand, but Powell's presser yesterday left much to be desired.... Read More
The market's track record for predicting the outcome of Fed meetings is nearly perfect in the months leading up to the decision. The Fed does not want any surprises, so it offers complete transparency to achieve this outcome.... Read More
Ultra-low economic data volatility is being met with ultra-low rate hike timing volatility across major developed central banks.... Read More
Further tightening in 2019 will begin to rein in financial leverage, but run the risk of impairing credit and lending growth.... Read More
Tim Duy is making the case that Powell's decreased reliance on econometric models has made the Fed less predictable. We simply see the Fed pivoting to an increased focus on inflation.... Read More
An update of the Federal Reserve's quantitative tightening... Read More
Markets are skeptical that inflation will rise enough to justify the need for several more rate hikes.... Read More
What looks like a technical issue in the Fed's balance sheet reductions is becoming a bigger deal. While we would not be surprised if the Fed has someone discuss the mechanics of quantitative tightening next week, we doubt the Fed will be too forthcoming about the growing divergence in policy and reality.... Read More