Top Stories

FED

Jerome Powell

World economy 13th May 2020

The Fed would prefer not to discuss going negative

David Lafferty (Natixis) | Central banks have pinned the front end to zero – or lower – but real rates and inflation premiums have some room to rise into the recovery phase – as slow as it may be. Yields will also see some upward pressure when the Fed and other central banks eventually begin to slow QE purchases. At this point, the Fed would prefer not to discuss going negative as the overnight market recently priced. Another sell-off or prolonged shutdown might put negative rates on the table, but we’re not there yet.

 

Jay Powell

Markets, World economy 5th May 2020

US Corporate Bonds: New York FED To Start Purchases “In Early May”

Markus Allenspach, Head Fixed Income Research, Julius Baer | At this stage, the corporate bond market needs support from the Federal Reserve to digest the negative news flow, such as the net tightening of lending standards for commercial and industrial loans in the senior loan officers’ survey published yesterday or the numerous cyclical data showing the depth of the contraction in the current quarter.

Jay Powell

Markets, World economy 10th April 2020

The Federal Reserve Ventures Into Unchartered Territory

J.P.Marín Arrese | Jerome Powell raises the stakes day by day by making bolder than ever decisions. He shatters the image of shyness, prudence and circumspection he offered when taking over the Fed chairmanship. His last daring move has left markets flabbergasted. No wonder. He has pledged 2.3 trillion to buy ungraded bonds and to set up a massive lending facility for Main Street companies, thus breaking the golden rule of including only high-rated paper in the Fed balance sheet. 

The Fed balance sheet and repo facility cannot explain the stock market’s movement in isolation

World economy 16th February 2020

Repo Facility: QE Or Not? It Does Not Matter

Unigestión | Whether it is called QE or not, buying bills (swapping reserves for short-term bonds), injecting liquidity into the market place and growing the balance sheet affects risky assets. Market conditioning (the Pavlovian effect) since the GFC is that stock markets cannot go down when the Fed is growing the balance sheet. Additionally, the Fed’s extremely aggressive response to the repo blowout in September is another signal to markets that it has a very low tolerance for market fluctuations.

Which central bank blinks and cut rates first?

World economy 13th February 2020

Which Central Bank Blinks And Cuts Rates First?

TwentyFour Asset Management’s CEO Mark Holman thinks central banks will move on rates any time soon, but where the first move comes from might be harder to call. They are sure it will not be the UK, thank goodness and also sure it won’t be the ECB. It won’t be the US in the near future either.

Quantitative easing now looks permanent – and has turned central banks into pseudo governments

World economy 26th January 2020

Quantitative Easing Now Looks Permanent–And Has Turned Central Banks Into Pseudo Governments

via The Conversation | After a pause of a few months, the world’s leading central banks are “printing” money again to try to bolster their economies. Commonly known as quantitative easing or QE, the European Central Bank (ECB) resumed its programme just before the turn of the year. The backdrop is lukewarm growth, a looming recession in Germany, and persistent fears of Japanese-style deflation.

Is it the Fed that has changed... or the world around it?

World economy 30th November 2019

Is It The Fed That Has Changed… Or The World Around It?

CaixaBank Research | The Fed has cut interest rates in 2019 for the first time in 11 years. However, it has barely lowered its growth outlook for the US and has justified the cut with the weakness of inflation and the persistence of risks. Is it possible that the Fed has changed its reaction function? The results of the analysis in this article suggest so.

Jerome Powell

World economy 20th September 2019

Jerome Powell’s Penelope tactics

J. P. Marín-Arrese | Once again, Jerome Powell played down the need for monetary easing in the press conference following the Fed’s rate cut decision. His unconvincing delivery led Mr Trump to heap scorn on his uninspiring performance. For once, his bitter recriminations were fully justified.

Jackson hole

World economy 26th August 2019

Jackson Hole in the sky

Christian Gattiker, Head of Research, Julius Baer │It is about time: central bankers present their take on the current mess at the Jackson Hole meeting, the prime plat-form for this. The more concerned they are the better. We think concerted central bank action will still avoid a global recession. Warming up to fiscal easing, as in Germany, is the icing on the cake.