The markets we use to monitor the economy (and those that influence it, which amounts to the same thing) have been tracking an economic slowdown since the 4th quarter of last year. That's when interest rates, real and nominal, long term and short term, started to decline, credit spreads started to widen and the copper to gold ratio started to [...]
For the third time in the last five months, inflation expectations have matched record lows. To hear officials and Economists talk, you’d think they were at or nearing record highs. The unemployment rate, after all, is at a 50-year low point which by mainstream reckoning should mean the cusp of an epic wage-driven breakout. According to the University of Michigan’s [...]
Again, who’s following who? As US Treasury yields drop and eurodollar futures prices rise, signaling expectations for lower money rates in the near future, Federal Reserve officials are catching up to them. It was these markets which first took further rate hikes off the table before there ever was a Fed “pause.” Now that the Fed is paused, it’s been [...]
In Europe, the ECB’s minutes for its April 2019 meeting claimed: Financial market developments, which were typically more forward looking, were more upbeat. In the US, the Federal Reserve’s minutes for its April 2019 meeting claimed: Participants noted that even if global economic and financial conditions continued to improve, a patient approach would likely remain warranted, especially in an environment [...]
Stodgy and mundane, the very model of prudence and wisdom. That is what central banks are supposed to be, even in this new age transparency paradigm. The central bank being put on display for the public has been opened up for those very reasons. So you can be assured they are the very model of prudence and wisdom. Constant tinkering [...]
These things are actually quite related, though I understand how it might not appear to be that way at first. As noted earlier today, the Fed (yet again) proves it has no idea how global money markets work. They can’t even get federal funds right after two technical adjustments to IOER (the joke). But as esoteric as all that may [...]
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 [...]
It was late on a Friday night in early September 1997. Because his speech was given at Stanford University out in the Pacific Time Zone just as the weekend was about to commence, market watchers were bated with an almost frenzied anticipation. Alan Greenspan had come to be seen as more than just a monetary policy bureaucrat. He had conquered [...]
I have to agree with my colleague Joe Calhoun. Everyone thinks the Fed is (over)reacting to the stock market drop in December. There’s a little bit of truth in it, reading so many FOMC transcripts as I have you get the unmistakable sense the S&P 500 is unofficially included on the policy dashboard. In the early part of 2007, policymakers [...]
And like that, it’s all different. For more than a year, two years, really, we’ve heard constantly about wage pressures. The US economy buoyed by several domestic factors as well as globally synchronized growth was in danger of getting too far out of hand. The unemployment rate said it was time – three years ago in 2015. The lower the [...]
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