Federal Reserve Raises Rates 25bps as Expected, Inflation has Eased Somewhat but Remains Elevated

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, Inflation has Eased Somewhat but Remains Elevated”

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”

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”

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”

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”

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”

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”

San Francisco Federal Reserve Governor Daly Says Open to Pulling the Reins Back on The Economy

The San Francisco Federal Reserve Governor Mary Daly said we (The Fed) know we want to be at 2.50% by year end. She was speaking in interviews with CNBC and Fox News. She added says she’s not forecasting beyond the next couple of meetings. The Fed raised rates by a half of a percent at their May meeting. That was the first time the bank raised rates this much since May 2000 when the Fed was led by Alan Greenspan. … Continue reading “San Francisco Federal Reserve Governor Daly Says Open to Pulling the Reins Back on The Economy”