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Fed fund rate hike of +25 bps to 4.75-5.00%; bank reserve balance rate 4.9%; discount rate 5%. Guidance changed from "ongoing rate increases" to "tightening as necessary" based on future data and events. Rate cuts are unlikely this year despite market expectations. The Fed deals with fiscal policy as it comes and has no comments or input into it. Inflation is moderating but remains high; path to +2% average inflation may be long and bumpy.
QT continues at -$60 billion/mo for Treasuries and -$35 billion/mo for MBS. The recent expansion of the Fed balance sheet due to temporary and short-term bank lending isn't really offsetting the QT that is for its longer-term securities.
Labor market remains strong now but the unemployment rate may rise to 4.5% later this year.
Economy is slowing overall. Services and consumer spending (possibly due to milder Winter) are strong, but goods and housing are weak. Risks now are to the downside, but soft landing is still possible.
Banking crisis: Strong actions were taken to boost confidence in the banking system. This crisis may lead to some tightening of financial conditions. The new FTBP and Discount Window lending facilities available to all banks should protect deposits and avoid runs (some happened very quickly). The failed banks and several others were under Fed watch, but runs and collapses still happened. Fed VC Barr is leading a review of bank supervision and regulation. The CRE exposure of smaller banks isn't seen as an issue now. Resolution of Swiss Credit Suisse was a huge relief.
Reaction of the stock market was mixed - first up, then down. Most Treasury rates fell on the day of fed fund rate hike.
Yikes - everything soared at first. By the time I logged in to sell something they’d gone into reverse! Need a faster ipad! Precious metals / miners did end the day quite a bit higher, but cut their gains near day’s end. Bloomberg is saying something about a Yellen speech about the same time that caused the reversal?
I was walking into the dentist at 2PM, I didn't think about the markets or Fed until I got home a few minutes ago ... I'll catch up on things and see if there's anything interesting or actionable tonight.
YM is -433 going into the close, so there's certainly some disquiet somewhere!
Comments
Fed fund rate hike of +25 bps to 4.75-5.00%; bank reserve balance rate 4.9%; discount rate 5%. Guidance changed from "ongoing rate increases" to "tightening as necessary" based on future data and events. Rate cuts are unlikely this year despite market expectations. The Fed deals with fiscal policy as it comes and has no comments or input into it. Inflation is moderating but remains high; path to +2% average inflation may be long and bumpy.
QT continues at -$60 billion/mo for Treasuries and -$35 billion/mo for MBS. The recent expansion of the Fed balance sheet due to temporary and short-term bank lending isn't really offsetting the QT that is for its longer-term securities.
Labor market remains strong now but the unemployment rate may rise to 4.5% later this year.
Economy is slowing overall. Services and consumer spending (possibly due to milder Winter) are strong, but goods and housing are weak. Risks now are to the downside, but soft landing is still possible.
Banking crisis: Strong actions were taken to boost confidence in the banking system. This crisis may lead to some tightening of financial conditions. The new FTBP and Discount Window lending facilities available to all banks should protect deposits and avoid runs (some happened very quickly). The failed banks and several others were under Fed watch, but runs and collapses still happened. Fed VC Barr is leading a review of bank supervision and regulation. The CRE exposure of smaller banks isn't seen as an issue now. Resolution of Swiss Credit Suisse was a huge relief.
Reaction of the stock market was mixed - first up, then down. Most Treasury rates fell on the day of fed fund rate hike.
https://ybbpersonalfinance.proboards.com/post/986/thread
YM is -433 going into the close, so there's certainly some disquiet somewhere!
Banks crashed.
I thought things were much better when the Fed just did what they thought was necessary and didnt talk about it
Remember when Greenspan would change the Funds rate between meetings?