At the end of last week, the Bureau of Economic Analysis reported data on US Personal Income and Spending that hit every sour note. There was the lowest inflation rate, the deflator to those spending figures, in years as well as the clear need to officially anoint a successor to the Verizon madness. The release also featured residual seasonality, and, [...]
It took a little longer than I expected, but it finally happened. FRBNY reports this morning that as of yesterday afternoon the effective federal funds rate was 2.41%. You’ll note that IOER, the ceiling, is still set 10 bps under the target upper boundary of 2.50%. Some quick math, that means EFF was yesterday 1 bps above IOER. The joke [...]
If “rate hikes” and QT are the world’s big problem in 2019, then why is the FOMC announcing the end of “rate hikes” and QT failing to have a positive effect? The answer will surprise most people. Central banks, dominated by central bankers who are Economists, meaning statisticians, are always behind. They do not lead. Monetary policy, which has no [...]
As an alternate member of the FOMC, Lorretta Mester has been sounding off on inflation. When the payroll report for the month of August 2018 was released early in September, Mester as President of the Cleveland Fed was widely quoted for her “hawkish” stance. Referencing the highest wage growth in a decade, speaking in Boston she said, “Today’s [jobs] report [...]
Last August, the Senate confirmed Richard Clarida for both a position on the Federal Reserve Board of Governors as well as to be installed as its Vice Chairman. Clarida had been chairman of the Economics department at Columbia as well as working for PIMCO where he had served the investment company as its Global Strategic Advisor since 2006. You can [...]
More than any conundrum in the bond market, the Federal Reserve has one on its hand much closer to home. Its home, anyway. The effective federal funds rate (EFF) has been stapled to IOER for each of the last fifty trading days. No variation whatsoever. EFF had converged with IOER back in October. A lot of ugly things began to [...]
Nothing the Fed did today, or has done up to today, has changed the curves. Eurodollar futures and UST’s, they are both still inverted. The former sharply inverted. The only thing that has changed since early January is the narrative – and not in a charitable way. It is treated as a positive when it is a pretty visible signal [...]
Today was supposed to see the release of the Census Bureau’s retail trade report, a key data set pertaining to the (alarming) state of American consumers, therefore workers by extension (income). With the federal government in partial shutdown, those numbers will be delayed until further notice. In their place we will have to manage with something like the Federal Reserves’ [...]
And we come full circle back again. It’s not what they say, it’s what they do. Kansas City Fed CEO Esther George was at least consistent, unlike all the other voting FOMC members. Throughout 2015 and 2016, the rest of them would say the economy was strong but then vote the other way, no “rate hike.” December 2015 was the [...]
In the chaotic days of the early “recovery”, those opposed to the Federal Reserve’s response largely fell into the wrong camp. The central bank had done too much, they claimed. Never mind how the first global panic in four generations had developed and then crushed the global economy, such deflation was over to be taken apart by rapid inflation if [...]
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