New York Times (November 4)
Fed Chairman Jerome Powell announced a tapering of stimulus programs, but he did not “lay the groundwork for higher rates.” That doesn’t mean “the era of near-zero rates will last anything close to as long as it did after the global financial crisis,” but if the current inflation surge “proves something other than temporary, Mr. Powell’s decision to stick to his guns” on interest rates “will loom as a missed moment to join other English-speaking countries in using monetary policy to try to stamp it out.”
Tags: Fed, Global financial crisis, Inflation, Interest, Monetary policy, Near-zero, Powell, Rates, Stimulus, Surge, Tapering
MarketWatch (July 13)
“U.S. stock indexes on Tuesday morning edged slightly lower from Monday’s record closes, as investors assessed a hotter-than-expected consumer inflation report for June, which suggests to some that the Federal Reserve may need to consider removing some of its monetary policy measures to avoid an overheated post-COVID economy.”
Tags: Consumer inflation, Economy, Fed, Investors, June, Monetary policy, Overheated, Post-Covid, Record closes, Stock, U.S.
Wall Street Journal (March 13)
“Regulators are pressuring Wall Street to do away with the London interbank offered rate by year-end. Companies are still making the switch.” The Federal Reserve is pushing the Secured Overnight Financing Rate (SOFR) as a replacement, but “the U.S. is running behind the U.K. and Europe, where investment firms and companies have been faster to transition to alternative rates,” including the Sterling Overnight Index Average (Sonia).
Tags: Europe, Fed, Investment firms, LIBOR, Regulators, Replacement, SOFR, Transition, U.K., U.S., Wall Street
Bloomberg (September 24)
“As the likelihood of additional federal stimulus fades, U.S. stock investors are returning their focus to the coronavirus pandemic and not liking what they see.” Consumers are again cutting back and “the prospects for a vaccine in the next few months have also waned just as the latest data shows an uptick in cases.” Moves by the Federal Reserve and “$3 trillion of federal stimulus helped fuel a torrid five-month rally that began in March,” but “their limitations have become clear.”
Tags: Consumers, Coronavirus, Cutting back, Fed, Limitations, Pandemic, Rally, Stimulus, Stock investors, U.S., Uptick, Vaccine
Reuters (April 29)
“There’s an end to everything except, apparently, central bankers’ creativity. Virus-damaged economies will need lots of help to heal, and more downturns are inevitable in the future. The monetary-policy bigwigs will keep coming up with more new ways to stimulate growth.” The Fed and BoE may “eventually overcome their aversion to negative interest rates” and/or “copy Bank of Japan chief Haruhiko Kuroda’s yield-curve control policy of targeting specific levels for 10-year government bond yields.”
Tags: BOE, BOJ, Creativity, Damaged, Downturns, Economies, Fed, Growth, Heal, Kuroda, Monetary policy, Negative interest, Virus, Yield curve
Wall Street Journal (March 4)
“The Federal Reserve has become the default doctor for whatever ails the U.S. economy, and on Tuesday the financial physician applied what it hopes will be monetary balm for the economic damage from the coronavirus.” Alas “financial markets were underwhelmed.” This “may speak to the limited effect that lower interest rates can have on the supply shock of a pandemic.”
Tags: Coronavirus, Damage, Economy, Fed, Interest rates, Markets, Monetary balm, Supply shock, U.S., Underwhelmed
Financial Times (February 7)
“Risk assets started this year on a tear. Before the coronavirus outbreak unsettled investors, global equity prices had risen by more than 10 per cent in three months while credit spreads were near record lows.” Attributing this to “to the Fed’s actions is alluring,” but probably incorrect and “it could leave investors wrongfooted again when the central bank pares back its interventions later in this year.”
Investment Week (November 18)
The Fed’s “180-degree policy U-turn…from tightening to loosening interest rates” has “increased uncertainty about monetary policy.” Another factor exacerbating matters is “the unpredictable and escalating trade war between the US and China.” Combined, they have “resulted in a higher frequency of volatility spikes and some violent sector rotation.”
Tags: China, Fed, Interest rates, Loosening, Monetary policy, Tightening, Trade war, U-turn, U.S., Uncertainty, Unpredictable, Volatility
USA Today (October 4)
“The unemployment rate fell from 3.7% to 3.5%, the lowest since December 1969…. Average wages, however, fell. Wall Street cheered the mixed report, which … kept in play a possible Fed rate cut this month, which would be the third since July.”
Tags: Fed, Mixed, Rate, Rate cut, Unemployment, Wages, Wall Street
Financial Times (September 20)
“Shock and confusion” resulted when overnight repo rates soared to 10%. The Fed was able to calm markets, but the situation is a reminder. “The more that QE (and its partial reversal) reshapes global finance, the greater the risk that the cogs in the machine unexpectedly misfire. That is no reason to panic. But central bank pilots—like investors—are learning on the job. Better hope they stay completely alert.
Tags: 10%, Central banks, Confusion, Fed, Global finance, Misfire, Panic, QE, Repo, Risk, Shock, Unexpected
