Updating the growth in central bank balance sheets... Read More
Growth is booming to new highs... Read More
S&P futures opened 60 points lower (1.9%), but have reversed to positive on the day. The market has priced in a 50 bps cut for tomorrow morning.... Read More
How accurately do the FOMC minutes, which are released only a few weeks after a meeting, reflect the full transcripts, which are released on a five year lag?... Read More
The decline in the market has put the Fed back in play this spring.... Read More
Day one of Powell's testimony offered two takeaways. First, the Phillips Curve is dead. Second, the Fed intends to support the repo market until at least April.... Read More
Market measures are pricing in a Fed rate cut in 2020. Fears of supply chain disruption are driving this idea.... Read More
The Fed made no major policy announcements, but Powell's comment about a floor on excess reserves was noteworthy.... Read More
The Fed is poised to hike Interest on Excess Reserves (IOER) by five basis points today in an attempt to keep the effective funds rate near the mid-point of its targeted range between 1.50% and 1.75%.... Read More
The Fed?s reaction to the disruption in repo markets shows how hard it will be for policymakers to reverse their ?money printing.?... Read More
Jim was on CNBC's Trading Nation yesterday talking about the outlook for the Fed going into 2020. The Fed has a plan to keep rates steady for the foreseeable future, but as Jim quipped, "everyone has a plan until they get punched in the mouth." He believes a 5% to 7% correction in stocks in 2020 could force the Fed to revisit talks of rate cuts.... Read More
Using a central bank as a blunt instrument to force government spending is not a good idea.... Read More
The Fed has spent $273 billion trying to calm the repo market.... Read More
Powell's inflation comments put a ceiling on the funds rate. Also, the FOMC statements continue to get shorter and easier to understand. According to the Flesch-Kincaid grade-level test, readers don't even need a high school diploma to understand yesterday's statement.... Read More
The consensus forming in the market is the Fed will cut tomorrow and signal they are done. While this seems a likely scenario, it is worth noting the market's true odds of further cuts are likely understated due to the liquidity problems in the repo market.... Read More
As the Fed begins purchasing $60 billion of T-bills per month, the composition of its portfolio will change.... Read More
The Fed's balance sheet has expanded by almost $200 billion due to its repo operations, but this is still a drop in the bucket compared to the combined assets of the biggest central banks.... Read More
The fed funds futures market is being distorted by problems in the repo market. In turn, this means the implied odds of any future rate cuts are also being distorted.... Read More
The median FOMC forecast is for rates to hold steady at the final two meetings of the year. Be careful making too much of the market's implied odds of cuts due to the stress in the repo market.... Read More