Hawkish Federal Reserve Again Raises Rates 75bps as Expected, March 23 Terminal Rate Higher

The Federal Reserve again raised rates by 75 bp at their September meeting. The market was pricing in 84.0% for 75 bps and 16.0% for 100 bps. It was a unanimous vote. Markets reacted to the dot plot, which shows higher terminal rates and the Fed holding higher for longer. Money market pricing largely unchanged for rest of 2022, with 75bps in Nov priced at 80% probability 50bps then priced for Dec. Hawkish 4.6% 2023 Fed dot has seen terminal … Continue reading “Hawkish Federal Reserve Again Raises Rates 75bps as Expected, March 23 Terminal Rate Higher”

Fed’s Powell Reiterated his Commitment to Inflation at Jackson Hole in Cato Speech

Federal Reserve System Chairman Jerome Powell on Thursday speaking at the Cato Institute reiterated his commitment to inflation as expressed at the Jackson Hole symposium. His speech came after ECB had just raised rates by 75bps, earlier in the week the RBA with 50bps and Bank of Canada also raised by 75bps. Powell took a decidedly hawkish tone at Jackson Hole which sent US stock markets sharply lower. The chairman sent stock futures lower when he reminded his to intention … Continue reading “Fed’s Powell Reiterated his Commitment to Inflation at Jackson Hole in Cato Speech”

Federal Reserve Beige Book Highlights Softening Demand as Wages Growing but at Slower Pace

The Federal Reserve released its Biege Book Wednesday prepared at the Federal Reserve Bank of San Francisco based on information collected on or before August 29, 2022. The focus on softening demand and pricing was evident. The outlook for future economic growth remained generally weak with expectations for further softening of demand over the next 6 to 12 months. The banks noted wages grew across all districts, although reports of a slower pace of increases and moderating salary expectations were … Continue reading “Federal Reserve Beige Book Highlights Softening Demand as Wages Growing but at Slower Pace”

What to Expect as Stocks and Bonds Ride High Ahead of Powell and ECB Speakers at Jackson Hole

The S&P, Dow and Nasdaq indices all pushed to new session highs ahead of Jerome Powell’s speech at Jackson Hole, Wyoming set for Friday at 10:00 a.m. ET.  Two ECB appearances are expected. Isabel Schnabel and Francois Villeroy will appear on a panel on the “outlook for policy post-pandemic.” We discuss the key points and agendas that markets will react to. Today a combination of short covering and hopes of a measured rate-hike path fueled the buying. The positive bias … Continue reading “What to Expect as Stocks and Bonds Ride High Ahead of Powell and ECB Speakers at Jackson Hole”

Cleveland Fed Mester Says Interest Rates Above Four as Appropriate

Cleveland Fed President Loretta Mester commented on rates and inflation again today as markets brace for the latest US jobs report. “I would pencil in going a bit above four as appropriate,” she said. In the background inflation is heading for negative month to month prints as oil continues to slide after a series of bearish EIA storage numbers. What will the talking heads spin there? On that Mester said need to see several months of monthly changes moving down … Continue reading “Cleveland Fed Mester Says Interest Rates Above Four as Appropriate”

Federal Reserve Again Raises Rates Again 75 Basis Points as Expected

The Federal Reserve again raised rates by 75 bp at their July meeting. The market was pricing in 90.6% for 75 bps and 9.4% for 100 bps. It was not a unanimous vote, however. Kansas City Fed President George did not dissent like last time when she preferred a hike of only 50 basis points. Last month the Fed funds futures curve, the terminal top was in May 2023 at 3.982% with a path of 75/75/50/50 priced in for the … Continue reading “Federal Reserve Again Raises Rates Again 75 Basis Points as Expected”

Fed’s Waller Says You Don’t Want to Overdo Rate Hikes Giving Bonds Some Relief

Federal Reserve Governor Christopher Waller speaking after back-to-back red hot inflation data said on Thursday, “with the C.P.I. data in hand, I support another 75-basis point increase” at the July FOMC. He added for him a 75 bps hike in July gets us to neutral which he sees as 2-2.25%. He added that you don’t want to overdo rate hikes. Market responded to the hawk in the bond and currency markets. The dollar came off the rampant surge and US … Continue reading “Fed’s Waller Says You Don’t Want to Overdo Rate Hikes Giving Bonds Some Relief”

Fed Must be Resolute and We Cannot Fall Short says NY Fed Williams

The New York Fed president John Williams, who is a voting member was speaking at a campus of the University of Puerto Rico continued with his hawkish tilt. He also focused on familiar themes saying and risks to the inflation outlook are particularly acute. His prepared speech followed a strong US jobs report for June and the release of the last FOMC minutes. The Fed holds around US$9 trillion of Treasury bonds and mortgage-backed securities. Federal Reserve Bank of New York President … Continue reading “Fed Must be Resolute and We Cannot Fall Short says NY Fed Williams”

Chicago Federal Reserve Governor Evans Says Labor Market is Downright Tight

The Chicago Federal Reserve Governor Evans, a renowned Fed dribbler in prepared notes on inflation and employment said less accommodative monetary policy will dampen very high labor demand. He believes inflation will fall substantially over the next couple of years. He said the labor market is a downright tight Inflation clearly much too high. Nothing new there. He spoke just ahead of the latest 20-year treasury auction. “I expect it will be necessary to bring rates up a good deal … Continue reading “Chicago Federal Reserve Governor Evans Says Labor Market is Downright Tight”

Federal Reserve Largest Raises Rates Most Since 1994, Up 75 Basis Points as Expected

The Federal Reserve raised rates by a 75 bp at their June meeting. The market was pricing in an 87% chance of a 75-basis point hike with the balance on 50 bps. It was not a unanimous vote, however. Kansas City Fed President George dissented, preferring a hike of only 50 basis points. Out the Fed funds futures curve, the terminal top was in May 2023 at 3.982% with a path of 75/75/50/50 priced in for the next four meetings, … Continue reading “Federal Reserve Largest Raises Rates Most Since 1994, Up 75 Basis Points as Expected”