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
FOMC statements continue to get shorter and easier to understand. According to the Flesch-Kincaid grade level test, readers don't even need a high school diploma to understand yesterday's statement.... Read More
The Bank of Canada is sitting out central bank week. But yesterday's strong GDP report and persistent inflation growth set the stage for another rate hike in October. ... Read More
The Fed was laughing all the way into the crisis. When the crisis hit in 2008 and things got serious, laughs at the FOMC meetings all but disappeared. ... Read More
The Fed will increase the monthly total of proceeds withheld from reinvestment to $24 billion this month. August will mark the end of reliable monthly reinvestment as purchases become a quarterly event. ... Read More
More eyes than usual will be watching Bank of Canada Governor Stephen Poloz this afternoon. After signaling a July rate hike, a series of economic misses, persistent infrastructure challenges and trade tensions have left the Bank's scope to tighten policy in doubt. ... Read More
The Fed has broken away from other western central banks, taking a hawkish path toward two more rate hikes in 2018. The ECB delivered on an end to asset purchases but was forced to acknowledge weakening growth with a forward guidance commitment. The Bank of England still has an opportunity to separate itself from the ECB, and we see potential for widening in the spread between U.K. and German 10-year yields.... Read More
Yesterday the Fed raised interest on excess reserves by 20 basis points in an effort to bring the target rate back to the middle of their range. While this does not pose any immediate problems, it highlights the fact that the Fed has entered uncharted territory. Their understanding of these types of quirks will be critical to policy.... Read More
Yesterday's FOMC statement was one of the most straightforward in a long time.... Read More
The federal funds rate has veered toward the upper end of the Fed's target range. The FOMC is thinking of raising interest on excess reserves by 20 basis points to give the illusion they are in control and everything is behaving according to plan.... Read More
The Eurozone growth picture is getting uglier. The sharp drop in economic growth will test the will of ECB officials hoping to calmly declare an end to asset purchases next week.... Read More
Persistent infrastructure struggles and weakness in housing may delay the Bank of Canada's next rate hike. ... Read More
Central bank balance sheets continue to shrink, but a large degree of this can be explained by the stronger dollar.... Read More
At each step in the Fed's normalization process, 60% of the reduction was to come via Treasuries and the other 40% via MBS. To date, the Fed is $50 billion short of their stated goal.... Read More
Both Bullard and Williams hint that the Fed's Summary of Economic Projections may eventually be discontinued.... Read More
Central bank balance sheets are now large enough to own roughly one third of all bonds in the Bloomberg Global Aggregate Index.... Read More
The current tightening cycle has reached 462.5 bps, the largest on record since 1980. In other words, Powell et al may be facing a very mature hiking cycle. ... Read More
Uncertainty over central bank tightening policies is finally hinting at a rise after shifting significantly lower since early 2017. We find news trends for "uncertainty" are nearing a key threshold historically synonymous with higher global financial stress. ... Read More
Jim Bianco offered his opinion on the FOMC decision on Bloomberg TV.... Read More