The Biggest Pusher of Easy Money, Former Federal Reserve Chairman Bernanke Warns on Stagflation in New Book

What do you do you do when you are the man that espoused easy money through Quantitative Easing, took it to new levels and the bloated world you created implodes? You write a book about it of course. That’s exactly what former Federal Reserve Chairman Ben Bernanke has done and of course he warns in his new book that the United States could face simultaneous sky-high unemployment and inflation on levels not seen since the 1970s. Any mention of his … Continue reading “The Biggest Pusher of Easy Money, Former Federal Reserve Chairman Bernanke Warns on Stagflation in New Book”

US Producer Price Inflation Rose 0.5% m/m and 11.0% y/y in April

US Producer price inflation continues elevated at a rapid pace, a long way from the Central Bank transitory mantra. Annual PPI came in at 11.0% (vs. 11.5% in March) core producer prices were up 8.8% (vs. +9.2% in March). March was the largest increase since data were first calculated in December 2009. Month-over-month the rise was 0.5% in April (consensus +0.5%), and core producer prices rose 0.4% m/m (consensus +0.6%).  April 2022 PPI The Producer Price Index for final demand … Continue reading “US Producer Price Inflation Rose 0.5% m/m and 11.0% y/y in April”

U.S. Inflation Higher Than Expected in April CPI +8.3% y/y vs 8.1% y/y

US CPI in April rose +0.3% m/m (consensus 0.2%). Core CPI rose 0.6% (consensus +0.4%). The bond and stock markets have been selling off on inflation fears. 10-year yields rising over 3%. On a year-over-year basis, total CPI is up 8.3% (versus 8.1% expected) and core CPI is up 6.2% (versus 6.0% Expected). The surge in energy and grains costs due to war in Ukraine has inflamed price pressures. The Fed began moving aggressively last month. April marked the eighth time … Continue reading “U.S. Inflation Higher Than Expected in April CPI +8.3% y/y vs 8.1% y/y”

Federal Reserve Financial Stability Report Warns on Worsening Liquidity Risks

The Federal Reserve released its twice–yearly report on financial hazards in its 2022 financial stability report warning the recent deterioration in liquidity has not been as extreme as in some past episodes but the risk of a sudden significant deterioration appears higher than normal. They also noted commodities have been subject to notable dysfunction. Federal Reserve 2022 financial stability report Highlights‘ “According to some measures, market liquidity has declined since late 2021 in the markets for recently-issued U.S. cash Treasury … Continue reading “Federal Reserve Financial Stability Report Warns on Worsening Liquidity Risks”

Federal Reserve Raises Rates 50 Basis Points First Time Since 2000 as Expected

The Federal Reserve raised rates by a half of a percent at their May meeting. This was the first time the bank raised rates this much since May 2000 when the Fed was led by Alan Greenspan. The Central Bank raised interest rates by 0.50% (to a target of 6.5%) back then. That was the last time the Fed would ever raise interest rates by that much in one move until day. The rate hike was priced in. The Balance … Continue reading “Federal Reserve Raises Rates 50 Basis Points First Time Since 2000 as Expected”

Inflation Surge Higher Continues in March US CPI +8.5% y/y largest Increase in Forty Years

US CPI in March rose 1.2% m/m (consensus 1.2%). Core CPI rose 0.5% (consensus +0.5%). The bond market sold off ahead, 10-year yields rising seven consecutive days prior to the release. On a year-over-year basis, total CPI is up 8.5% (versus 7.9% in February) and core CPI is up 6.5% (versus 6.4% February). The surge in energy and grains costs due to war in Ukraine has inflamed price pressures. The Fed began moving aggressively last month. March marked the eighth … Continue reading “Inflation Surge Higher Continues in March US CPI +8.5% y/y largest Increase in Forty Years”

Brainard Warns Fed Prepared to Take Stronger Action on Inflation if Needed

Federal Reserve Governor Lael Brainard pulled the rug out from under the markets on Tuesday when she said, “Inflation is much too high and subject to upside risks and The Fed is prepared to take stronger action if inflation and inflation expectations suggest the need.” Nothing new but remember algorithms have no FOMO emotion while the bond market had a mini taper tantrum. Highlights from Brainard Speech Combined impact of rate hikes and balance sheet reduction will bring policy to a … Continue reading “Brainard Warns Fed Prepared to Take Stronger Action on Inflation if Needed”

Uncertainty About the Economic Outlook Remains Extraordinarily High says NY Fed Williams

The New York Fed president John Williams, who is a voting member was speaking to a symposium at Princeton University continued with his hawkish tilt. He said the process of reducing the size of the Federal Reserve’s balance sheet could start at the next meeting, May 3 & 4. He also focused on familiar themes saying and risks to the inflation outlook are particularly acute. The Fed holds around US$9 trillion of Treasury bonds and mortgage-backed securities. “These actions should enable us … Continue reading “Uncertainty About the Economic Outlook Remains Extraordinarily High says NY Fed Williams”

Federal Reserve Raises Rates for First Time Since 2018 as Expected by 25 Basis Points

The Federal Reserve raised rates by a quarter of a percent at their March meeting, The QE Taper pace as scheduled ended in March. The rate hike was priced in; however, the surprise is seven 7 hikes in the dot plot. The market has priced that in, but expectations are that generally the Fed lags the market. Last meeting the dot plot showed four hikes in 2022 Federal Reserve FOMC Statement  Federal Reserve Announcement Wednesday 16 March 2022 14:00:00 ET The … Continue reading “Federal Reserve Raises Rates for First Time Since 2018 as Expected by 25 Basis Points”

Inflation Surging Higher in February US CPI +7.9% y/y largest Increase in Forty Years

US CPI in February rose 0.8% m/m (consensus +0.8%). Core CPI rose 0.5% (consensus +0.5%). On a year-over-year basis, total CPI is up 7.9% (versus 7.5% in January) and core CPI is up 6.4% (versus 6.0% January). Inflation remains persistently high as Central Bankers keep trying to reassure us that soaring inflation will come under control. The surge in energy costs due to war in Ukraine is still to come. Pressure is on the Fed to begin moving aggressively when … Continue reading “Inflation Surging Higher in February US CPI +7.9% y/y largest Increase in Forty Years”