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Federal Open Mouth Committee

edited January 28 in Other Investing
Depending on the extent of damage I’d expect some of the FOMC members to be out publically talking their game plan, whatever it is, and trying to prop-up any teetering markets. They’ve been sidelined in the days leading up to this week’s meeting,

“Blackout Periods Federal Reserve policy limits the extent to which FOMC participants and staff can speak publicly or grant interviews during Federal Reserve blackout periods, which begin the second Saturday preceding a Federal Open Market Committee (FOMC) meeting and end the Thursday following a meeting unless otherwise noted.” Source

Comments

  • I believe that they remain quiet until they've made all the trades necessary in their accounts so as to ride out the coming storm produced by their announcements.
  • Now, now... be nice. :)
  • edited January 27
    Come on guys. Interest rates are historically low and are not the least bit connected to economic conditions.. Are the markets not way late for a revision to the mean even if interest rates remained flat? Do American investors think trees grow to the sky and markets only go up?
  • edited January 27
    I agree with @Mark. They’re busy buying and selling their own positions before saying anything. But if anything comes out of significance I’ll post it here. They must have dumped all their gold before the Fed statement yesterday. Falling like a rock.
  • @hank - about that gold, I don't get it either which is why I tend to stay away from the metals and miners. This coming from a guy who was going to buy the miners on Monday for a trade. I must have seen a different bright shiny object on my way to do so.
  • edited February 1
    Atlanta Federal Reserve Bank President Raphael Bostic told The Financial Times over weekend that the Fed may impose a 50 basis point rate hike in March. Bostic is a FOMC participant and would have been covered by the aforementioned blackout.

    (Excerpt) The Federal Reserve could opt to raise its benchmark rate by 50 basis points if a more aggressive approach to taming inflation is needed, Raphael Bostic, president of the Fed’s Atlanta branch, told the Financial Times in an interview. Bostic stuck to his prediction that three quarter-point increases starting in March would be the most likely scenario, though stubbornly high consumer prices could justify a more robust rate rise …

    “Every option is on the table for every meeting,” Bostic said on Friday. “If the data say that things have evolved in a way that a 50-basis-point move is required or be appropriate, then I’m going to lean into that . . . If moving in successive meetings makes sense, I’ll be comfortable with that,” he told the newspaper.

    Story from Bloomberg
  • edited January 31
    Atlanta Federal Reserve Bank President Raphael Bostic told The Financial Times over weekend that the Fed may impose a 50 basis point rate hike in March.
    Saw that too in other sites and that could have sizable impact on the long bonds. Mid March is timeframe when it starts.
  • edited February 1
    “Fed's Daly supports rate liftoff in March, interest rates at 1.25% by end of year ” (1/31)

    Source

    Excerpt from Reuters - The U.S. Federal Reserve should start raising interest rates from near zero in March and can comfortably raise them to 1.25% by the end of the year, San Francisco Federal Reserve Bank President Mary Daly said on Monday.

    "If you get to that point, so say that's the reality, that's quite a bit of tightening, but it’s also quite a bit of accommodation left in the system because the terminal rate of interest is 2.5%, so you are supporting the economy, not pulling away the punchbowl completely and causing disruptions, but you are taking away some of the extraordinary accommodation we have been providing," Daly said in an interview with Reuters Breakingviews. "I think that balance is the appropriate thing to do with the uncertainty we face."

  • At 1.25% (from the current 0.25%) is still a way below the 2% when the pandemic started in March 2020. In combination with tapering, perhaps it may contain the 6% inflation.
  • Even if the Fed raised rates to 2.00% by the end of the year, real rates will remain negative.
  • edited January 31

    Even if the Fed raised rates to 2.00% by the end of the year, real rates will remain negative.

    Yes.

    Looks like they’re trying to talk some of the overheated markets down without having to really do much heavy lifting (raising rates quickly). I try to hedge my bets being up there in years. Still have a bit of exposure to longer dated investment grade bonds in the event the Fed pushes too hard and economy falls off a cliff. Not recommending that for anyone else. Just the way I tend to think about hedging risks.

    Agree, bonds are not a good investment with inflation far above what they yield.

  • edited February 1
    It does seem like some Fed officials have been jawboning.
    This is a very difficult environment for bonds.
    The fixed-income portion of my portfolio is in short-term bonds and a Stable Value fund.
    I really dislike bonds now but it wouldn't be prudent to be invested entirely in stocks at this life stage.
    I have to remind myself that a bad year in bonds (investment-grade, short to intermediate term)
    is often comparable to a bad day for the U.S. stock market.
  • edited February 1
    Fed’s Harker Says 4 rate hikes appropriate this year.

    (Excerpt) Right now, I think four 25 basis point increases this year is appropriate," Harker said during an interview with Bloomberg TV. "But there's a lot of risk here," including the risk that inflation is worse than expected, or that it eases faster than Fed officials expect, he said.

    Here
  • edited February 1
    Fed’s Bullard Doesn’t think a half point rate increase “really helps us”

    Interviewed February 1

    (Excerpt) St. Louis Federal Reserve President James Bullard on Tuesday said he favors lifting rates at the U.S. central bank's meeting in March and likely again in May, but he pushed back against the idea of kicking off the coming tightening cycle with a half-percentage point hike. "I don't think a 50-basis point hike really helps us right now," Bullard said in an interview with Reuters … </i1

    https://www.reuters.com/business/feds-bullard-does-not-think-half-point-rate-hike-really-helps-us-reuters-2022-02-01/
  • So what does Bullard want-a 100 basis point hike?
  • edited February 1
    “but he pushed back against the idea of kicking off the coming tightening cycle with a half-percentage point hike.”

    Hard to say. Sounds like he wants to start out slowly (quarter point) and ramp up later. The interview was posted to Twitter. I don’t have access to it. But there should be some longer passages in the WSJ in coming days. I’ll add some of those when I can.
  • edited February 1
    Fed fund futures market expectations now are +0.25% hikes in successive FOMC mtgs in March, May, June. Then skip hike in July, another hike (4th) in September, skip hike in November and another hike (5th) in December. This leads to a speculation that one of those early hikes (any of March, May, June but more likely March) could be +0.50%. Things can change - the fed fund futures can change; Powell can flip-flip (after all, he has done it several times (4?) already, and on rates in Fall 2019, well before anyone had heard of Covid-19).
    https://www.cmegroup.com/trading/interest-rates/countdown-to-fomc.html
  • Sounds believable.
  • edited February 1
    JMHO - But sounds to me like they’re hoping to chill some markets (housing & many equity sectors). But they’re not getting much response with mere words to date. Hence the talk of a .50% hike in the first meet. (I don’t think they’d dare.) Honestly, I don’t know what it would take to bring some rationality about. I doubt 1-2% in hikes could stem the mania - until after it bites deeply into the economy months later.

    Powell is in a corner.

    At some point psychology & momentum will turn. I guess a few of the most overpriced have already turned south. Some crypto and the ARKK stuff. (Yes ARKK may well be on the rebound - after something like a 70% fall from peak).

    Full disclosure: I’m an invested bear.
  • edited February 10
    Fed’s Brainard Calls for 1% Rate Hike By July

    Feb 10 (Reuters) - “St. Louis Federal Reserve President James Bullard said on Thursday that he has become "dramatically" more hawkish in light of the hottest inflation reading in nearly 40 years, and he now wants a full percentage point of interest rate hikes over the next three U.S. central bank policy meetings.

    “Within minutes, Bullard's view became the market's view, with rate futures contracts now fully pricing an increase in the Fed's target range for its policy rate to 1%-1.25% by the end of its policy meeting in June, with some bets on an even steeper rate hike path.”


    Reuters
  • Fed fund futures are going crazy indicating 2 hikes in March (i.e. +0.50%) and a total of 7 in 2022. https://www.cmegroup.com/trading/interest-rates/countdown-to-fomc.html
  • edited February 10
    What they say isn’t necessarily what they do.

    As if gold / miners needed any more reason to slither lower. Gold’s only off $4 - but p/m miners off 2.50% at 3 PM.
  • hank said:

    What they say isn’t necessarily what they do.

    As if gold / miners needed any more reason to slither lower. Gold’s only off $4 - but p/m miners off 2.50% at 3 PM.

    CCJ (uranium) at fair value, down -1.67% on the day, 10 Feb, '22.
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