Here's a statement of the obvious: The opinions expressed here are those of the participants, not those of the Mutual Fund Observer. We cannot vouch for the accuracy or appropriateness of any of it, though we do encourage civility and good humor.
Jeff Rosenberg from Blackrock was featured on Bloomberg in the post news conference coverage today. Excellent insights into bonds / inverted yield curve, The 10-year treasury has fallen to about 3,4% today after getting above 4% only a couple months ago. Rosenberg’s fund, BAMBX, hasn’t exactly shot the lights out lately. Lost over 3% in 2022 and down slightly YTD. Of course, down 3% was a lot better than many equity and bond funds did in 2022.
Fed fund rate hike +25 bps (range 5.00-5.25%); discount rate 5.25%; bank reserve balance rate 5.15%. Data & events dependent policy flexibility is indicated going forward. The QT continues at -$60 billion/mo Treasuries, -$35 billion/mo MBS. The monetary policy is restrictive.
Tight credit conditions at banks are being monitored. They may have the effect of some rate hikes, but that is unquantifiable.
Inflation remains high, well above the Fed’s +2% average target. Inflation-expectations are now modest. Labor markets remain strong. There is excess demand. The FOMC will make decisions meeting-by-meeting, but cuts in 2023 won’t be appropriate.
Economy has slowed down, but recession may be avoided.
The US banking system is sound. This crisis has revealed some issues for small/medium banks, including unexpected & fast runs. The unsured institutional money moved out first, and now, the retail money is moving out gradually. With the resolutions of the 3 biggest problematic banks, the banking crisis may be near the end. VC Barr has the sole and distinct constitutional role on supervision, but Chair Powell & other members do provide input. The focus now is on how the problems can be avoided in the future. Barr’s report will be implemented to the extent possible. US bank consolidations have been happening for decades. It is desirable to have small, medium & large size banks. But specific crisis-merger decisions are by the FDIC & it chooses the least costly option(s), makes related selections & any decisions on required waivers.
Use of the overnight reverse repos by the money-market funds is being watched.
Debt-ceiling is a fiscal issue that must be addressed timely. Consequences of a US debt default would be unknown but severe, & no one should expect the Fed to protect from those.
Powell isn’t dwelling on the past but wants to control the controllable going forward.
Comments
“The U.S. banking system is sound and resilient ...”
Fed fund rate hike +25 bps (range 5.00-5.25%); discount rate 5.25%; bank reserve balance rate 5.15%. Data & events dependent policy flexibility is indicated going forward. The QT continues at -$60 billion/mo Treasuries, -$35 billion/mo MBS. The monetary policy is restrictive.
Tight credit conditions at banks are being monitored. They may have the effect of some rate hikes, but that is unquantifiable.
Inflation remains high, well above the Fed’s +2% average target. Inflation-expectations are now modest. Labor markets remain strong. There is excess demand. The FOMC will make decisions meeting-by-meeting, but cuts in 2023 won’t be appropriate.
Economy has slowed down, but recession may be avoided.
The US banking system is sound. This crisis has revealed some issues for small/medium banks, including unexpected & fast runs. The unsured institutional money moved out first, and now, the retail money is moving out gradually. With the resolutions of the 3 biggest problematic banks, the banking crisis may be near the end. VC Barr has the sole and distinct constitutional role on supervision, but Chair Powell & other members do provide input. The focus now is on how the problems can be avoided in the future. Barr’s report will be implemented to the extent possible. US bank consolidations have been happening for decades. It is desirable to have small, medium & large size banks. But specific crisis-merger decisions are by the FDIC & it chooses the least costly option(s), makes related selections & any decisions on required waivers.
Use of the overnight reverse repos by the money-market funds is being watched.
Debt-ceiling is a fiscal issue that must be addressed timely. Consequences of a US debt default would be unknown but severe, & no one should expect the Fed to protect from those.
Powell isn’t dwelling on the past but wants to control the controllable going forward.
https://ybbpersonalfinance.proboards.com/post/1029/thread
As for the rest . . . Clap hands for Tinkerbell.
It might work.