FED

In the World, World economy 20th April 2023

Fed’s Beige Book notes that global economic activity and the outlook have remained unchanged

Link Securities | The Federal Reserve’s latest Beige Book indicates that overall economic activity and the economic outlook have remained broadly unchanged in recent weeks in most districts, although two districts saw a deterioration in their future outlook. The report noted that consumer spending and manufacturing posted flat or slightly lower growth, although auto sales were steady and travel and tourism rebounded. Banks also recorded a tightening of their lending…

World economy 2nd February 2023

Powell’s dovish hints water down Fed’s stance

J.P. Marín-Arrese | The Fed’s message was tough enough, warning that the hiking cycle will go on unabated, even if it loses some steam, until inflation comes fully under control. The markets expected the quarter per cent rise in the Federal funds would prompt Powell to offset such a slowdown with a hawkish performance. Yet, in the press conference, he provided enough dovish hints to send the stocks bouncing back…

World economy, World politics 7th January 2023

Jobs and growth data won’t deter the Fed’s resolve

J.P. Marín-Arrese | Last Friday, Wall Street jumped on employment and services data. Jobs openings, while better than expected, signalled a downward path. The service sector contracted for the first time till 2020. The ensuing bullish reaction shows the markets bet the Fed might undertake a U-turn earlier than pointed out in the last FOMC minutes. Investors seem to outwit the Fed, disregarding its determination to keep rates tight enough…

World economy 22nd December 2022

Uncertainty over monetary tightening hurts the economy

Juan Pedro Marín-Arrese | The Fed is running out of munition after raising its rates substantially. The narrowing margin forces it to slow down monetary tightening. Keeping unabated its previous speed would wreak havoc on the economy. Yet, Jay Powell countered any hope of further softening by delivering a relentless hawkish message at the latest press meeting that plunged stocks into utter disarray. Powell made it crystal clear at Jackon…

Jerome Powell baffled both the experts and the markets

World economy 22nd September 2022

Is Powell Ready To Do Whatever It Takes?

J.P. Marín-Arrese | While markets mildly reacted to the widely discounted rate hike and the prospect of protracted high-interest levels, the stern message delivered by Jerome Powell unsettled them. Stocks tumbled as he emphasised the Fed’s commitment to tighten its policy as long as inflation remains unabated, flying high above its 2% medium-term target. In short, he sounded ready to do ‘whatever it takes’ to curb the current price spiral….

World economy 26th May 2022

Demand For Repo At The Fed Hits New Highs: $2 Tr

Intermoney | The increased scarcity of paper is prompting money funds to dump their excess liquidity in the reverse repo window, for which the Fed is offering 0.8%. In fact, demand for Fed reverse repurchase agreements reached new highs after 94 participants placed a total of $2,045 tr. As we have explained, the increased interest in reverse repo trading, which is usually an investment of last resort, has been exacerbated…

Spanish economy 3rd May 2022

Rising Rates, Falling Stock Prices

Fernando González Urbaneja | The relationship between bond and share prices is well known; when bond yields fall, shares are likely to rise. And the opposite is true, the lower the bond yield, the higher the share price. This is the general thesis that admits exceptions and variants. Bond prices are closely linked to the interest rate determined by central banks as well as the risk premium applied to each…

World economy 19th March 2022

Monetary Tightening Is A Double-Edged Sword

J.P. Marín-Arrese|Skyrocketing prices confront central bankers with a challenging dilemma. Their sacred duty to preserve stability forces them to take vigorous action to curb inflation. Yet, they are conscious that tightening the monetary stance will fail to put on hold the current supply shock. Worse still, only by pulling hard on the hand brake coulld they stop short prices from escalating. A move that would come at a heavy cost…

World economy 27th January 2022

Jay Powell Sets The Stage For Monetary Tightening

Juan Pedro Marín-Arrese | The hawkish and straightforward message Jerome Powell delivered yesterday surprised analysts and markets alike. They expected a non-committal press conference following a routine FOMC meeting. Instead, Powell unfolded the planned roadmap for monetary tightening. He even announced a rate hike in March, breaking the rule of refraining from providing precise tips on future action, coupled with a sharper than expected increase in federal funds rates. It…

World economy 18th December 2021

A Tale of Two Central Banks

J.P. Marín Arrese | Charles Dickens opens his novel by describing the contrast between the sedate life in London and the bloody spasms shaking Paris under the Revolution with the famous sentence: ‘It was the best of times, it was the worst of times…’. While the current economic scenario bears little in common with the dramatic events described by the prominent author, we enjoy a robust recovery but face an…

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