April 6, 2022 | Daily JAM, Short Term |
Minutes from the March meeting of the Federal Reserve released Wednesday, April 6, showed that only Russia’s invasion of Ukraine kept the central bank from raising benchmark interest rates by 50 basis points instead the 25 basis-point increase the Fed actually instituted at that meeting. “Many” Fed officials viewed one or more half-point increases as appropriate going forward if price pressures fail to moderate. The minutes showed the Fed proposing to shrink its balance sheet at a maximum pace of $60 billion in Treasuries and $35 billion in mortgage-backed securities each month. That’s in line with market expectations
April 6, 2022 | Daily JAM, Morning Briefing |
Money markets are pricing in another 225 basis points of increases to the Federal Reserve’s benchmark interest rate by the end of 2022. That’s on top of the 25 basis point increases already delivered in March. The Fed hasn’t done that much tightening–a total of 2.5 percentage points–in one year since 1994.
April 5, 2022 | Daily JAM, Morning Briefing, Short Term, You Might Have Missed |
In remarks prepared for a Tuesday speech to the Minneapolis Federal Reserve Bank Federal Reserve Governor Lael Brainard said “Currently, inflation is much too high and is subject to upside risks. The committee is prepared to take stronger action if indicators of inflation and inflation expectations indicate that such action is warranted.” And she called for reducing the Fed’s balance sheet as early as next month. The bond market certainly heard Brainard’s remarks as a promise of more action faster.
March 31, 2022 | Uncategorized |
Inflation as measured by the Personal Consumption Expenditures Index, the Fed’s preferred inflation measure, rose by 6.4% in the year through February, the government reported today. That’s the fastest inflation rate on this scale since 1982. PCE inflation ran at an annual rate of 6.1% in January. The core index climbed at a 5.4% rate after stripping out food and fuel costs. In January the core PCE ran at an annual 5.2% rate.
March 26, 2022 | Daily JAM, Mid Term, You Might Have Missed |
Some financial trends make the transition from directional moves driven by events–the war in Ukraine or a speech by Federal Reserve chair Jerome Powell that opens there door to a 50-basis-point (instead of the “business as usual” 25 basis point move) increase in interest rates–to trends with their own momentum. These momentum trends then run until events arise to stop or reverse the trend Higher bond yields may have entered into that “momentum” phase last week. The yield on the 10-year Treasury ended Friday, March 25, at 2.47%, up 10 basis points on the day.
March 22, 2022 | Daily JAM, Morning Briefing |
As of the close today, Tuesday, March 22, Treasuries had sold off steeply raising the yield on the 10-year Treasury to 2.38%, a huge (for the Treasury bond market) 9 basis points. The rout took the yield on the 2-year Treasury to 2.16%. On Friday,March 18, the 2-year Treasury yielded 1.94%. The bond market is taking yesterday’s comment/promise/threat from Fed chair Jerome Powell seriously
March 16, 2022 | Daily JAM, Videos |
I’m starting up my videos on JubakAM.com again–this time using YouTube as a platform. My one-hundredth-and thirteenth YouTube video “The Fed gets depressed” went up today. Happy spring! But not for the Fed. In the meeting today, the Federal Reserve raised interest rates by 25 basis points, which was almost universally expected. The market hasn’t moved much in response. However, I’m looking at the Dot Plot projections from Fed officials issued today with lowered expectations for GDP growth in 2022, as well as higher expectations for inflation. In this video I break down what that could mean as we look at the Treasury yield curve and the chances of a coming recession.ke to take advantage of changing and volatile yields.
March 14, 2022 | Daily JAM, Short Term, Videos |
I’m starting up my videos on JubakAM.com again–this time using YouTube as a platform. My one-hundredth-and twelfth YouTube video “Trend of the Week: Central banks tighten faster than expected” went up today. This week I’m looking at tightening by central banks, including the Fed. I think that some of us expected that with the invasion of Ukraine, banks would pump the brakes on raising interest rates and reducing their stimulus. With its announcement last week that it would accelerate the reduction of bond buying, the European Central Bank sent the opposite signal, and that makes me think that the Fed will stay the course to raise rates as well when it reports this Wednesday. I look at the volatility in the treasury market and talk about some moves you can make to take advantage of changing and volatile yields.
March 12, 2022 | Daily JAM, Mid Term |
The U.S. central bank meets this week and is widely expected to raise its benchmark interest rate by 25 basis points to range of 0.25% to 0.50% from the current target range of 0%to 0.25%. That move would signal the start of a cycle The Russian invasion of Ukraine has pretty much taken the possibility of a 50 basis point interest rate increase off the table–too much economic risk at a time when everything is no uncertain–and that has left the consensus firmly anchored at 25 basis points. Which has taken almost all the drama out of the Wednesday, March 16, meeting of the Fed’s Open Market Committee. Almost.
March 10, 2022 | Daily JAM, Morning Briefing |
Economists surveyed by Bloomberg had projected that inflation, as measured by the Consumer Price Index, would jump to a 7.9% annual rate for February. And that’s exactly what the Labor Department reported today, March 10. That’s a jump from the 7.5% annual rate in January. And it is the fastest annual rate of inflation in 40 years.
March 9, 2022 | Daily JAM, Mid Term |
Consternation isn’t an investment strategy. Although I certainly understand that reaction to current stock market moves. The day to day volatility is that extreme. But if we focus on that volatility and on how confusing this market is, I think we’re in danger of overlooking the investable trends (up and down) in this market. So let me try, please remember that this is a work in progress and subject to revision, to tease out some of the longer trends that will drive stock prices in the medium term.
March 4, 2022 | Daily JAM, Morning Briefing |
The U.S. economy added 678,000 new jobs in February. That was the most new jobs since July. Economists surveyed by Bloomberg had expected the economy to add 423,000 jobs in the month. The official unemployment rate fell to 3.8%. Average hours earnings, however, lagged
