Most noteworthy in the statement was a new discussion on the desire to implement QT this year. In the FOMC statement they said they expect “to begin implementing a balance sheet normalization program this year, provided that the economy evolves broadly as anticipated.” Data dependent, right? There was an addendum note on how they will conduct this. The monthly cap on …
Central Banks
Key Beige Book bullet points and labor market comments
Here are the key bullet points from the just released Beige Book from the Fed: “Most of the twelve Federal Reserve Districts reported that their economies continued to expand at a modest or moderate pace from early April through late May.” “Consumer spending softened with many Districts noting little or no change in nonauto retail sales, while auto sales have …
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Is a root canal less painful when you know it’s coming?
Central Banks In a continued concerted effort to make this go as smooth as possible, two Fed members are telling us to ‘Keep calm and Carry on’ about QT. James Bullard last night said “The runoff in the balance sheet will go very smoothly. It’s going to be managed, it’s going to be slow.” That latter is certainly obvious but the former is not. John Williams said …
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Will ‘Gradual’ End Differently Than Measured?
United States The one reveal of note in yesterday’s minutes was the plan coming together with how to proceed with QT. Just as the rate hike cycle has been extraordinarily gradual, QT will be as well but the end result will still be the same, a tighter monetary policy. Greenspan did something similar in the mid 2000’s as each successive meeting when he tightened the …
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The Fed Wants to Hike in June
I’ll start with the bottom line. The Fed is looking past the Q1 weakness and continues to lay the groundwork for more rate hikes this year, with the next one most likely being in June. “The committee views the slowing in growth during the first quarter as likely to be transitory and continues to expect that, with gradual adjustments in the stance of monetary policy, …
Yellen feels good but challenges ahead
In her speech and Q&A (including twitter) late yesterday, Janet Yellen said nothing new but seems to feel pretty comfortable with where the Fed is positioned in terms of proceeding with their exit and “allowing the economy to kind of coast and remain on an even keel.” She continued to defend the stance that “we want to be ahead of the curve and not behind it.” Our …
“Like a river that don’t know where it’s flowing…”
At 2pm est yesterday the two biggest risks to the market were highlighted in their different forms. Firstly, nothing new was revealed in the minutes, especially after hearing from a slew of Fed members over the past few weeks but maybe market participants need to get slapped a few times before they pay attention. I'll say again, I have a bridge to sell you if you …
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And the FOMC minutes say…
As we heard from a slew of Fed members over the past few weeks including 2 of 3 troika members (Fischer and Dudley), I wasn’t expecting much new in the just released minutes and we really didn’t get it. I like to joke that some said this, several said that, many said here, a few said there. It’s apparent that the Fed is on track to hike rates two more times this year …
Balance Sheet Shrinkage, Boom and Bust
With the hoped for Fed plan to hike interest rates two more times this year and a building swell of discussion on when to start allowing balance sheet shrinkage, I’m beginning to sense a pattern on what the preferred timing might just be with this all. Bill Dudley on Friday said “If we start to normalize the balance sheet, that’s a substitute for short term hikes…and …
Mark Carney, Arthur Burns and G. William Miller
Sorry to continue to harp on this but Mark Carney and the BoE have a problem on their hands. I’ll call it the Arthur Burns/G. William Miller problem, the two Fed Chairman in the 1970’s who focused more on employment than the flaring inflation, http://www.federalreservehistory.org/Media/Image/EventDetailMain/38-1. Rule #1, a steady currency and thus stable prices is …
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Peter is the Chief Investment Officer at Bleakley Advisory Group and is a CNBC contributor.