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Do you ever have an "aha!" moment when you aren't looking for it? I just did a few days ago. I had been following the repo story and had written about it here on seeking alpha - here and here . But all of a sudden the most obvious thing about it struck me. The Fed is out of its depth becaus...
The Fed’s reluctant decision to flood the overnight market with cash in the coming months was surely a surprise, even for monetary policymakers. As explained in the last article , the run-up in repo rates of September was no surprise to market veterans. Repo run-ups around statement da...
Federal Reserve officials got a little “shock” in the banking week ending September 18, 2019. The reserve deposits that the commercial banks hold at Federal Reserve banks, surprisingly dropped below $1.4 trillion . This surprise caused Fed officials to go into “alert&...
Two weeks ago, many were worried about the market “bump” that the Federal Reserve had to deal with. The market disturbance came in the area of repurchase agreements and the Fed responded quickly, and, in my opinion, kept things quiet although some analysts wanted to make a bigger...
After constantly running through what the FOMC gets (very) wrong , let's give them some credit for what they got right. Though this will end up as a backhanded compliment, still. After having spent all of 2018 forecasting accelerating inflation indices, from around New Year's Day forward poli...
By Jill Mislinski The Bureau of Labor Statistics released the September Consumer Price Index data Thursday morning. The year-over-year non-seasonally adjusted Headline CPI came in at 1.71%, down from 1.75% the previous month. Year-over-year Core CPI (ex Food and Energy) came in at 2.36%, d...
Ahead of Thursday’s September report on US consumer inflation, the Treasury market’s implied inflation forecast via 5-year maturities quietly ticked down to 1.24% in Wednesday’s trading (based on daily data via Treasury.gov). The crowd’s estimate of future pricing p...
The Phillips Curve It's a rather contentious idea because it seems obvious enough, yet many economists reject it as a useful management tool. The idea - the Phillips Curve - is that there's a tradeoff between unemployment and inflation. The lower we want inflation to be, the more unemploymen...
By Gerhardt (Gary) P. Herbert, CFA Last week, I explained how Federal Reserve (Fed) balance sheet expansion could send 10-year Treasury yields toward zero over the next few years. While that notion may seem far-fetched to some, my point was to highlight why quantitative easing isn't a pana...
RECESSION ANGST VS. RECESSION REALITIES Global growth have been at the center of investor worries, but in some geographies, this is currently more a function of anticipation than hard data. Looking into the fourth quarter of 2019, we would break the world into two groups. Europe and some m...