Market Yawns at Fed’s 50 Basis Point Cut
The Fed did largely what I suggested they might (i.e., reduce rates by 50 basis points) – but the market isn’t buying it. It’s not every day you see the Fed cut by 50 basis points and the Dow Jones fall over 700 points….
Bond Market Suggests 2 Rate Cuts Needed
Jay Powell (and the Fed) have been steadfast on holding rates the past few months. However, given the emerging threats to global (and U.S.) growth (with CoronaVirus) there is perhaps scope for the Fed to reconsider…
Bonds Telegraph Two More Rate Cuts
The bond market is telling the Federal Reserve to cut interest rates. With the yield curve flat – this is the money market telling the Fed they are too tight with monetary policy.
Fed Disappoints the Market… and it Shouldn’t be a Surprise
The Federal Reserve made it clear this cut was insurance against what could go wrong in the future.
To be clear, that’s not what is wrong today (that’s a harder case to make) – but what might happen. Specifically the Fed cited…
“… implications of global developments for the economic outlook as well as muted inflation pressures.”
And whilst the headlines focused on the 25 basis point cut – the other indirect rate cut was a premature end to the reduction of bonds the central bank holds on its balance sheet.
4 Charts to Move the Fed on Interest Rates
This post explains 4 charts which will influence the Federal Reserve’s Bank on interest rates. (i) Core PCE Inflation (ii) Front-end Yield Curve (iii) Non-farm payrolls and hourly earnings; and (iv) Total employment as it relates to GDP
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