Federal Reserve

Dovish Tones in Bank of England and Fed Reports

October 20, 2010

It has become gospel in central banking circles that important policy changes must be communicated clearly in advance in order to produce desired market reactions.  Minutes from the Bank of England’s October 6-7 meeting and the Fed’s report on regional economic conditions, known as the Beige Book, constitute an education of the public to anticipate […] More

U.S. Vital Signs When the FOMC Met Previously

August 10, 2010

Since the June FOMC statement was released, the dollar has retreated 6.2% against the euro and 4.5% against the yen.  Ten-year Treasury yields have declined another 30 basis points to 92 bps below their level when the Federal Open Market Committee met in late April.  The Dow Jones Industrial Index is 2.8% higher than its […] More

Long-Term Slumps in Stock Prices

May 20, 2010

In an update yesterday entitled U.S. Unemployment, CPI Inflation, Stock Prices and Fed Policy, I quantified several data trends, which make a rate increase by the Fed this year unlikely.  This posting looks in further depth at the prolonged weakness of stock prices, which is already more than a decade long.  It’s not limited to […] More

Next Week

April 23, 2010

A really exciting week lies ahead for economic data junkies and central bank watchers.  Thursday, April 29, sees the first of Japan’s four holiday closures, that being Showa Day to honor the Emperor’s birthday, followed by Constitution Day on Monday, May3, Greenery Day on May 4 and Children’s Day on May 5.  Together these off-days […] More

Reflections About the Fed on a Snowy Day

February 25, 2010

A key message of Fed Chairman Bernanke’s testimony this week has been that while improved financial market functionality warrant the gradual unwinding of unconventional measures, the economy is not ready for outright monetary tightening.  It may be an “extended period” before such a time arrives.  The point is not that the recovery that saw GDP […] More

Fed Statement As Expected

December 16, 2009

Analysts weren’t looking for any remarkable initiative in the FOMC statement, and that’s what they got.  Economic conditions are better from the standpoint of the employment situation, income growth and financial market conditions, but officials reiterated that “exceptionally low levels of the federal funds rate” are likely “for an extended period.”  I’d bet this pretty […] More

Vital Market Prices at the Time of Prior FOMC Meetings

December 16, 2009

The FOMC is not expected to change its Fed funds target, nor is the conditional guidance that “exceptionally low rates for and extended period” likely to get modified further.  The last statement of November 4 made news by imposing three conditions to that pledge: low resource utilization (which can be determined from the jobless rate […] More

Pre-FOMC Interview With ForexTV

December 15, 2009

In this second interview that I gave to Julie Sinha of ForexTV, I review and interpret the significance of today’s U.S. producer price and industrial production data releases and provide some background on the FOMC’s tendency not to make waves at its final December meeting each year. More

Surprisingly Brisk U.S. Growth This Quarter

December 15, 2009

The dollar’s upturn began with improving market technical support but is now getting fed by economic data, which are highlighting a comparatively stronger U.S. recovery after a recession that, despite being harsh in absolute terms, was not as severe as other regions experienced.  In U.S. data released this morning, industrial production registered an advance of […] More