FOMC
January 26, 2011
Some meetings of the FOMC attract tremendous prior attention. This has not been one of those although the first meeting of every year creates some uncertainty as four new reserve bank presidents take their place as voting members. Tom Hoenig of the Kansas City Fed was a voting member in 2010 and cast a dissent at each meeting last year in favor of a more hawkish rhetorical and action-related stand. Hoenig is not a voting member in 2011. My FOMC table below shows vital market indications at the moment of the FOMC’s prior announcements. The most striking difference since the last meeting on December 14 is that the ten-year Treasury yield is virtually unchanged on balance in spite of data that point to improving economic growth late in 2010. An 85-basis point rise over the six weeks between the FOMC’s November and December meetings had been widely blamed on the second round of Fed quantitative easing, dubbed QE2. Since mid-December analysts have upgraded projected U.S. growth in 2011 in line with data trends, an extension of the Bush tax cuts, and a huge stimulus package of new spending increases. Euphoria has been reinforced by strong earnings reports this month and a solid rise in equity prices. The dollar has weakened slightly on balance against the euro and yen, and more evidence has surfaced of Chinese and Opec diversification away from the U.S. currency.
The Federal Open Market Committee is not expected to announce any policy changes. The rate range of 0-0.25% will be retained, and so probably will the conditional forecast of exceptionally low levels for an extended period, which Hoenig especially opposed. No changes in the planned $600 billion of Treasury purchases through June are anticipated. 40% of that program has thus far been completed, and it is not likely to be extended beyond June. U.S. core inflation has been below 1.0% since last April, and the jobless rate is elevated at 9.4%. QE2 was imposed because officials were frustrated with progress toward their twin mandates of fostering maximum employment and price stability. The assessment of growth conditions probably will be upgraded, however. The announcement will be made around 14:15 EST, about two hours from the time of this writing.
EUR/$ | $/JPY | 10Y, % | DJIA | Oil, $ | |
06/30/04 | 1.2173 | 109.44 | 4.63 | 10396 | 37.95 |
06/30/05 | 1.2090 | 110.89 | 3.96 | 10370 | 57.00 |
06/29/06 | 1.2527 | 116.07 | 5.20 | 11077 | 73.41 |
06/28/07 | 1.3452 | 123.17 | 5.10 | 13456 | 69.82 |
08/07/07 | 1.3749 | 118.55 | 4.73 | 13510 | 72.27 |
09/18/07 | 1.3888 | 115.75 | 4.51 | 13475 | 81.42 |
10/31/07 | 1.4458 | 115.28 | 4.42 | 13873 | 93.59 |
12/11/07 | 1.4682 | 111.49 | 4.11 | 13645 | 89.78 |
01/30/08 | 1.4792 | 107.31 | 3.70 | 12454 | 91.70 |
03/18/08 | 1.5786 | 98.73 | 3.41 | 12257 | 107.53 |
04/30/08 | 1.5562 | 104.58 | 3.83 | 12953 | 111.54 |
06/25/08 | 1.5568 | 108.37 | 4.18 | 11837 | 133.62 |
08/05/08 | 1.5445 | 108.42 | 3.97 | 11484 | 119.82 |
09/16/08 | 1.4144 | 105.16 | 3.36 | 10936 | 91.18 |
10/08/08 | 1.3625 | 99.87 | 3.50 | 9447 | 87.02 |
10/29/08 | 1.2933 | 97.15 | 3.81 | 9145 | 67.38 |
12/16/08 | 1.3790 | 90.14 | 2.52 | 8687 | 44.14 |
01/28/09 | 1.3253 | 90.01 | 2.61 | 8356 | 42.92 |
03/18/09 | 1.3115 | 98.13 | 2.94 | 7340 | 47.73 |
04/29/09 | 1.3331 | 97.06 | 3.02 | 8194 | 51.05 |
06/24/09 | 1.3984 | 95.43 | 3.59 | 8373 | 68.76 |
08/12/09 | 1.4221 | 96.17 | 3.71 | 9366 | 70.64 |
09/23/09 | 1.4779 | 91.50 | 3.50 | 9859 | 69.13 |
11/04/09 | 1.4884 | 90.75 | 3.51 | 9896 | 80.66 |
12/16/09 | 1.4542 | 89.78 | 3.56 | 10478 | 73.14 |
01/27/10 | 1.4045 | 89.49 | 3.61 | 10148 | 73.31 |
03/16/10 | 1.3756 | 90.64 | 3.67 | 10645 | 81.45 |
04/28/10 | 1.3157 | 94.10 | 3.75 | 11043 | 82.57 |
06/23/10 | 1.2284 | 90.12 | 3.13 | 10307 | 76.50 |
08/10/10 | 1.3107 | 85.85 | 2.81 | 10605 | 79.94 |
09/21/10 | 1.3132 | 85.21 | 2.66 | 10747 | 73.05 |
11/03/10 | 1.4059 | 81.35 | 2.53 | 11174 | 84.59 |
12/14/10 | 1.3423 | 83.37 | 3.38 | 11497 | 88.47 |
01/26/11 | 1.3667 | 82.34 | 3.39 | 11971 | 86.33 |
Copyright Larry Greenberg 2010. All rights reserved. No secondary distribution without express permission.
Tags: FOMC