March 23, 2021 | Daily JAM, Morning Briefing |
This morning Federal Reserve Chair Jerome Powell gave reassuring inflation testimony before the House Financial Services Committee. Prices would rise this year as Americans are able to go out and spend post-pandemic, but while “We do expect that inflation will move up over the course of this year,” he said. “Our best view is that the effect on inflation will be neither particularly large nor persistent.” As you might expect on that view, the yield on the 10-year U.S. Treasury dropped 5 basis points to 1.64% as of 2 p.m. New York time on Tuesday, March 23. On most days recently a drop in Treasury yields like that would have produced a significant rally in stocks. But not today.
March 21, 2021 | Daily JAM |
The likelihood is that more nervousness in the financial markets about the Federal Reserve will lead to higher Treasury yields this week. The growing fear is that the Fed is asleep at the switch on inflation and that the central bank is going to be forced to play “inflation catch up” down the road. To a great degree the Fed has brought this problem on itself.
March 17, 2021 | Daily JAM, Morning Briefing |
At today’s (March 17) meeting of its Open Market Committee the Federal Reserve held its target interest rate at 0% to 0.25% and continued its commitment to buying $120 billion a month in Treasuries and mortgage-backed assets, as expected. But the central bank’s dot-plot survey showed more slippage on projections of when the Fed will raise interest rates. The majority of the Fed officials polled continued to see no interest rate hikes through 2023. But a larger number than in December–7 out of 18, up from 5–now see the first rate increase coming some time before the end of 2022.
March 16, 2021 | Daily JAM, Morning Briefing |
On Wednesday the Federal Reserve will update its projections for GDP growth, inflation, and the timing of any interest rate increase. In December, Fed officials, on the famous (or infamous) dot plot indicated that that central bank officials expected to hold benchmark interest rates in the current 0% to 0.25% range through the end of 2023. in the months since that projection from the Fed the market has been pricing in a different scenario, one that sees a tightening in interest rates from the Fed at the end of 2022. In other words roughly a year earlier than the Fed’s projected schedule last December.
March 14, 2021 | Daily JAM, Morning Briefing |
With everything going on, it’s easy to forget about the upcoming meeting of the Federal Reserve’s interest rate setting body, the Open Market Committee, on Wednesday. Which would be a mistake because, in my opinion, nothing is more important than interest rates (and bond yields) for the direction of stocks over the next four months or so. The Fed isn’t expected to announce any change in policy on Wednesday. Benchmark interest rates will stay at 0% to 0.25%. The central bank is almost certain to keep buying $120 billion a month in Treasuries and mortgage-backed securities But this meeting in scheduled to include an update on the Fed’s projections for future inflation and economic growth. Those words have the potential to shift the market ahead of any action.
March 10, 2021 | Daily JAM, Morning Briefing |
Headline inflation, as measured by the consumer price index, climbed 0.4% month over month in February the Bureau of Labor Statistics reported today. That puts the year over year increase in headline inflation at 1.7%. Core inflation, which excludes more volatile food and energy prices, was up 0.1% month over month in February. That’s a 1.3% year over year increase in core inflation. Both measures are well below the Federal Reserve’s 2% inflation target.
February 22, 2021 | Daily JAM, Morning Briefing |
As of the close in New York today, February 22, the yield on the 10-year Treasury had climbed another 3 basis points to 1.37%. Commodities that can act as inflation hedges were up as well. Copper showed no signs of ending its climb, rising 4.17% today to $8909 a ton on the London Metal Exchange today
February 21, 2021 | Daily JAM |
Federal Reserve Chair Jerome Powell will testify in front of the Senate Banking Committee on Tuesday and the House Financial Services Committee on Wednesday–and do his best not to make any news.
February 18, 2021 | Daily JAM, Short Term |
10-year Treasury yield hits 1.30% even as stocks drop with rates hitting peak from before the March 2020 pandemic panic
September 29, 2020 | Daily JAM, KCAC, Mid Term, Special Reports, Volatility |
Yikes. Does this market have enough volatility for you? And I think that volatility will only get worse over the next two to six months, I can't remember a market with so much potential to move up or down in big relatively short-term volatility as this one. Just as...
September 13, 2020 | Daily JAM |
...nothing of consequence from the Federal Reserve when it ends its September meeting on Wednesday, September 16. At least that's the market consensus right now. Which means that if the Fed makes adds a statement on inflation, or interest rates, or about the economy,...
August 27, 2020 | Daily JAM, Mid Term, You Might Have Missed |
As anticipated in Wednesday's rally--the Standard & Poor's 500 climbed 1.02% and the NASDAQ Composite was up 1.73%--Federal Reserve Chair Jerome Powell on Thursday announced that going forward the Fed would let inflation rise to above its current target of 2% from...
