Federal Reserve Raises Rates 25bps as Expected, Project One More 25bps Hike

The Federal Reserve raised rates by 25 bp to a target range of 4.75-5.00% in unanimous vote at their February meeting as expected. Market Fed futures pricing suggested 81% of a 25-bps hike before the decision while the vast majority of economists were also predicting a hike with a handful predicting no change or a cut. Fed projection show there will be one more 25 basis point hike this year and 75 basis point cuts in 2024. Fed statement deletes … Continue reading “Federal Reserve Raises Rates 25bps as Expected, Project One More 25bps Hike”

What is The Federal Reserve Discount Window and How it Operates

The Federal Reserve discount window is a lending facility that allows eligible depository institutions (such as banks and credit unions) to borrow funds from the Federal Reserve to meet short-term liquidity needs. The discount window operates as follows: The discount window is an important tool for the Federal Reserve to manage the liquidity of the banking system and to provide support during times of financial stress. However, borrowing from the discount window can be seen as a signal of financial … Continue reading “What is The Federal Reserve Discount Window and How it Operates”

Federal Reserve Beige Book Highlights Supply Chain Disruptions Continued to Ease

The Federal Reserve released its Biege Book Wednesday prepared at the Federal Reserve Bank of New York based on information collected on or before February 27, 2023.  The report was consistent with what we have seeing with economic data released, not a lot has changed over the past month, the economy is weakening. It was reported housing markets continued to weaken, clearly higher interest rates have further dented home sales and household finances. Inflationary pressures remained widespread, though notably price … Continue reading “Federal Reserve Beige Book Highlights Supply Chain Disruptions Continued to Ease”

Federal Reserve Raises Rates 25bps as Expected, Disinflationary Process has Started

The Federal Reserve raised rates by 25 bp to a target range of 4.50-4.75% in unanimous vote at their February meeting as expected. Market Fed futures pricing suggested a 96% chance of a 25 bps hike. The markets focused on “ongoing increases in the target range will be appropriate.” Fed says “Inflation has eased somewhat but remains elevated.” in a change from “Inflation remains elevated, reflecting supply and demand imbalances related to the pandemic, higher food and energy prices, and broader price … Continue reading “Federal Reserve Raises Rates 25bps as Expected, Disinflationary Process has Started”

Federal Reserve Beige Book Highlights Housing Markets Continued to Weaken

The Federal Reserve released its Biege Book Wednesday prepared at the Federal Reserve Bank of Cleveland based on information collected on or before January 9, 2023.  The report was consistent with what we have seeing with economic data released, not a lot has changed over the past month, the economy is weakening. It was reported housing markets continued to weaken, clearly higher interest rates have further dented home sales and household finances. Notably many retailers noted increased difficulty in passing … Continue reading “Federal Reserve Beige Book Highlights Housing Markets Continued to Weaken”

Federal Reserve Raises Rates 50bps as Expected, Hawkish Revisions to Unemployment and Inflation

The Federal Reserve raised rates by 50 bp to a target range of 4.25-4.50% at their December meeting. The markets focused on the changes in the dot plot showing Fed funds finishing 2023 above 5% and hawkish revisions to the unemployment, GDP and inflation forecasts. A higher-for-longer scenario that continues in 2024 and 2025 dots. Stock markets sold off on the changes. Most officials project an unemployment rate rising to 4.6% or higher by end of 2023 and stays above … Continue reading “Federal Reserve Raises Rates 50bps as Expected, Hawkish Revisions to Unemployment and Inflation”

Federal Reserve Beige Book Highlights Higher Interest Rates Further Dented Home Sales

The Federal Reserve released its Biege Book Wednesday prepared at the Federal Reserve Bank of Boston based on information collected on or before November 23rd, 2022.  The report was consistent with what we have seeing with economic data released. It was reported higher interest rates further dented home sales, which declined at a moderate pace overall but fell steeply in some Districts. Inflation was expected to hold steady or moderate further moving forward. Yesterday the CoreLogic Case-Shiller 20-city home price … Continue reading “Federal Reserve Beige Book Highlights Higher Interest Rates Further Dented Home Sales”

NY Fed Williams Expects US Jobless Rate to Rise from 3.7% to 4.5-5.0%

The New York Fed president John Williams, who is a voting member of the FOMC was speaking at a virtual speech to the Economics Club of New York continued with a hawkish tilt on inflation saying, “There is still more work to do,” he is less the hawk with jobs. On inflation he expects it to cool to 5.0-5.5% by year end and 3.0-3.5% by late 2023, which is comparable to the range of 2.6-3.5% in the Fed’s SEP. Williams ahead of Fridays … Continue reading “NY Fed Williams Expects US Jobless Rate to Rise from 3.7% to 4.5-5.0%”

Markets Reverse Sharply on Feds Powell Statements, What Does it all Mean?

Thirty minutes in financial markets is a long time. Markets were relieved after the Federal Reserve again raised rates by 75 bp at their November meeting. Then Chairman Powell started talking and it all collapsed. The Nasdaq went from +25.45 at 10856.15 to negative to close -366.05 points at -3.36% at 10464.65. The 10-yr note yield fell to 3.98% but jumped to 4.11% after the close of the cash session. Traders had reacted initially to the tone of possible rate hikes slowing … Continue reading “Markets Reverse Sharply on Feds Powell Statements, What Does it all Mean?”

Federal Reserve Again Raises Rates 75bps as Expected, Hints at Possibly Smaller Hikes

The Federal Reserve again raised rates by 75 bp to a target range of 3.75% to 4.0% at their November meeting. The market was pricing in 98.0% for 75 bps and 2.0% for 50 bps. It was a unanimous vote. Markets reacted to the tone of possible rate hikes slowing by selling the US dollar and buying equities indices after the release. In determining the pace of future increases is the key dovish line. The Fed said they are prepared … Continue reading “Federal Reserve Again Raises Rates 75bps as Expected, Hints at Possibly Smaller Hikes”