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’Banking off the FOMC
The obvious place to start when discussing the impact of Wednesday’s FOMC meeting on US banks is with the downward pressure on net interest margins that will result from the extended period of low rates.
The ‘QE-exit’ inflation paradox
RBC Capital Markets takes an interesting take on the Fed’s newly released Fed Funds projections.
First the projections, which look like this:
As the note under the chart declares, each circle represents an individual FOMC member’s judgment of where Fed Fund rates should be at the end of the specified year.
It’s official: Fed’s 2 per cent inflation target
Full long-range FOMC statement belowm and click here for the Fed’s economic projections charts and tables…
Following careful deliberations at its recent meetings, the Federal Open Market Committee (FOMC) has reached broad agreement on the following principles regarding its longer-run goals and monetary policy strategy.
Late-2014 and a problem of flexibility
The S&P 500 has gradually climbed from 1310 at the time of the FOMC statement to about 1322 at pixel time, and at one point 5-year Treasury yields fell to an all-time low of about 0.76 per cent. They’re now at 0.78 per cent.
Markets Live special edition – FOMC presser
The Bernanke Bowl, Fedstock, Fedapalooza, Ben and Fed’s Excellent Adventure.
We wouldn’t bring back the cheesy nicknames for just any FOMC presser, but given the unveiling of the federal funds rate forecasts for the first time ever,
Q&A: The Fed’s interest rate forecasts
The below is from the FT’s Money Supply blog that covers all things central banky.
So the Federal Reserve on Wednesday will publish forecasts which will show us how long it plans to keep rates at more-or-less zero.
Fed releases inevitably cringe-worthy 2006 FOMC meeting transcripts
This is always fun.
The Twittersphere and other bloggers have understandably focused on some howlers exposing the Fed’s cluelessness about the state of the housing market then.
We recommend the Twitter feed of the NYT’s Binyamin Applebaum for more,
Fed to publish fed funds rate projections
Everyone already knew before its last meeting that the FOMC would discuss the possibility of publishing its members’ forecasts for the federal funds rate in its Summary of Economic Projections (SEP).
What we didn’t know was whether they would actually agree to anything.
FOMC statement, 13 December 2011
Go back to watching Mario. See you in 2012.
– FOMC statement, 13 December 2011
Not quite, of course, but as expected, there’s nothing to see in the December FOMC statement. Rates remain the same and Twist continues.
What the FOMC will (merely) discuss tomorrow
We’ll wait to see if Fedwire has any updates to his article from last week, but right now it seems likely that no major policy decisions will come out of tomorrow’s one-day meeting of the FOMC.
As our colleague Robin Harding points out,
Dove, actually…
… is all around, though in this case not until after the holidays.
The FOMC meeting on Tuesday of next week isn’t expected to produce any major policy decisions (more on which in our next post).
But there will be much talk about what might be done in the first quarter of next year,
Bernanke could do better
Having floated the idea that the Federal Reserve should target a nominal level of GDP, Goldman’s top economist Jan Hatzius is none too pleased that Ben Bernanke shot the suggestion down in Wednesday’s post FOMC presser.
US Markets Live: Bernanke saves the world edition
And by “Saves the World” we mean “Thanks the stars that he’s not Mario Draghi”.
We’re kicking off at 2:05pm in New York (6:05pm in London), ten minutes before we find out that Ben is late and wait another ten minutes the presser is scheduled to begin.
Another reason the Fed might buy MBS
If you’ve been following reports of what might happen at next week’s FOMC’s meeting, you probably know that the Fed is contemplating further purchases of agency mortgage-backed securities.
And there are least two,
Fedwire reports… the return of MBS purchases?
Fresh intel stolen from inside the halls of the Eccles Building (not really, but you get the point):
Federal Reserve officials are starting to build a case for a new program of buying mortgage-backed securities to boost the ailing economy,
FOMC minutes from the September 20-21 meeting
Also known as the Great Monetary Policy Brainstorm.
That’s a pithy summary of the minutes from the September FOMC meeting, which were released on Wednesday afternoon. You already know the policy decisions.
Was Twist an “Anti-Stimulus”?
To our inbox this morning came a note from RBC arguing that the FOMC statement last week acted as a kind of “Anti-Stimulus”.
Here’s the explanation:
But perhaps the bigger problem is not that what the Fed has done “won’t work” but rather the potential perception that the Fed’s latest action could actually prove to be an anti-stimulus.
A few more analyst reactions to the FOMC statement
We covered some of this in our Markets Live chat and would refer you to the transcript, but we’re posting some of the more interesting analyst reactions below.
Most focused on the Fed’s targeting the longer end of the curve more than anticipated and on what today’s announcement might imply for mortgage finance,
Breaking on FedWire…
This is getting ridiculous.
At this rate there won’t be any point logging on to read the FOMC minutes on Wednesday evening. FedWire, the unofficial/official news service of the Federal Reserve, has done such a comprehensive briefing the market on what to expect that there can’t possibly be any surprises…
Goldman says let’s Twist again
Found.
Someone who thinks a change in the composition of the Federal Reserve’s balance sheet (a new Operation Twist) would be a good idea.
Guess who? (Obviously it’s not Bill Gross).
Give up?
OK then,
How to serve front-end yields up with a Twist
The chatter on Friday in response to the stomach-punching payrolls is that we’re headed for Operation Twist Part Deux — number 13 on our list of Fantasy Fed options — though not outright QE3 in the form of large scale asset purchases.
Jedi Kocherlakota on the ways of the FOMC force
As FT Alphaville noted before, the role of the FOMC is about more than just conducting monetary operations. It’s also about moulding investor opinion and expectation.
So, when traditional monetary tools of the Federal Reserve dry up,
The Fed dissenters
So now we know why FOMC members Fischer and Plosser voted against Bernanke’s “on hold till ’13″ policy.
From Bloomberg:
Philadelphia Fed President Charles Plosser said in an interview yesterday that taking action after stocks tumbled “signaled that we are in the business of supporting the stock market.” Richard Fisher,
Banks: QE3 is coming
Hope springs eternal in the investment banks.
Tuesday’s FOMC statement drew attention for its commitment to 0 – 0.25 per cent rates until at least mid-2013. This led to the less than sudden realisation that holding (some) stocks was more attractive than nursing the corpse of a 2-year bill.
Twisting the Twist
Confused by the late, powerful rally on Wall Street overnight, that saw the Dow Jones Industrial close up 4 per cent?
Don’t be.
On one level, Federal Reserve chairman Ben Bernanke is targeting the stock market with the deliberately ambiguous statement that economic conditions “are likely to warrant exceptionally low levels for the federal funds rate at least through mid-2013″.
Yields at record lows and it’s EURUSD vs CHF
Looks like QE2.0 is going down a treat in the FX and bond markets.
First, 3-year, 5-year, and 10-year charts.
Nice little price bump here for those buying 3-years at the first post-downgrade auction.
FOMC statement – 9 August 2011
It’s here! We’re saved!
Wait a minute….
The full FOMC statement for August 9 is pasted below for your reading pleasure.
It’s more QE2.0 than QE3.
There are two key changes.
First, the Fed has given a semi-specific date for the continuation of the federal funds rate at “exceptionally low levels”.
Search for the proverbial one-armed economist continues
On the one hand…
…the possibility remains that the recent economic weakness may prove more persistent than expected and that deflationary risks might reemerge, implying a need for additional policy support.
FOMC preview: countdown to more of the same, probably
We plan to pummel you with unrelenting promotion remind you once or twice more before Wednesday, but we’ll be hosting a Markets Live session during Bernanke’s press conference after the FOMC meeting.
Despite the many obvious signs of slowing growth since the FOMC last met in April,