Unwarranted Inflation Fears Could Impact Recovery
Interest rates steadied this past week (March 22-26) after the Fed altered the rules, vowing not to cave to market whims or pressures, instead waiting for the “actual data” to dictate the path of monetary policy. We agree with the Fed’s approach, but worry that the markets’ uneducated view of the causes of systemic “inflation” […]
Fed Ignoring Market Rate Spikes – Basing Policy on “Actual Data”
The median of the Fed dot-plot (a summary of the individual member views on where Fed Funds will be over the next three years) indicated no changes in the Federal Funds Rate until 2024. But, because the Fed upgraded its economic (GDP) forecast to 6.5% from 4.2% for 2021, and a few more FOMC (Federal […]
Dysfunctional Credit Markets – Still Waiting on the Fed
As the week ended, U.S. credit markets appeared confused, if not outright dysfunctional. The 10-Year Treasury yield began February at 1.09% and reached an interim peak of 1.54% on February 25. Then it retreated to 1.42% as markets thought the rise had simply been overdone. But Fed Chair Powell’s refusal to assure financial markets regarding […]
Careful Mr. Powell; Higher Rates Will Kill the Recovery
Treasury yields rose again this week; blame this one on Fed Chairman Powell. In an interview at the Wall Street Journal’s Job Summit, he said that the Fed isn’t ready to stop the run-up in yields “until financial conditions tighten.” In so saying, he paved the way for those financial conditions to tighten as markets […]
The Rate Spike Will Damage the Recovery
Fed Intervention Needed There was quite a spike in interest rates the last week of February with the 10-Year T-Note spiking from a 1.36% level as of the close on Wednesday to as high as 1.60% intraday with a close of 1.55% on Thursday. Friday’s close was 1.45%. But, a lot of damage was done. […]