In the new minutes, Janet Yellen and her friends at the Fed did lose the ‘considerable time’ phrase, in the sense that it had been part of a sentence that said that ‘it will likely be appropriate to maintain the zero to one-quarter percent target range for the federal funds rate for a considerable time following the end of its asset purchase program.’ In this statement, they say that they… Read More
The second day of the Federal Reserve’s Open Market Committee concludes later today and the big question is whether or not they will drop the term ‘considerable time’ from their forward guidance statement. The phrase has denoted how long the Fed expects to wait between the end of quantitative easing and the beginning of actual interest rates hikes. Earlier this year, Yellen indicated that ‘considerable time’ refers to six months… Read More
The highlight of last week’s Schwab Impact conference for me was seeing, and then meeting, former Federal Reserve Chairman Ben Bernanke. Initially, Bernanke came to the stage in front of nearly 5,000 attendees and gave a 10-15 minute speech about the Federal Reserve’s response to the 2008 financial crisis. He then did a 45 minute question and answer session with Schwab’s Chief Investment Strategist, Liz Ann Sonders, who did a… Read More
During the 2008 financial crisis, Warren Buffet compared the US economy to a heart attack victim lying flat on the floor. Buffet’s analogy has continued to be a useful analogy as the Federal Reserve pumped medicine into the economy in the form of buying bonds on the open market in a program known as quantitative easing, or simply QE. That program came to an end yesterday, so you could carry… Read More
Unlike most central banks, the Federal Reserve has what is known as a dual mandate: to foster full employment and stable prices. Generally speaking, doves are thought to focus more on full employment at the expense of inflation and, theoretically, hawks are more willing to accept higher unemployment for the sake of stable prices. Of course, in reality, everyone is in the middle somewhere, since no one wants high unemployment… Read More
With a lot of focus being put on the coming end to the Federal Reserve’s quantitative easing campaign, this article will delve into some of the other factors impacting interest rates in the US. The Federal Open Market Committee (FOMC) has maintained a steady course ever since Chairman Bernanke first hinted at the end of quantitative easing in the spring of 2013. The “Taper” which is scheduled to complete this… Read More
ALM Insights is focused on banks and other institutions that use their portfolio to manage risk on both sides of their balance sheet. It takes an in-depth look at securities investment strategies, balance sheet and asset/liability strategies, regulatory topics and general economic information. To view this issue, click the image below. In This Issue: What if You Called The Market Perfectly? The Impact of Fed Tightening Why Aren’t Interest Rates Higher?
ALM Insights is focused on banks and other institutions that use their portfolio to manage risk on both sides of their balance sheet. It takes an in-depth look at securities investment strategies, balance sheet and asset/liability strategies, regulatory topics and general economic information. To view this issue, click the image below. In This Issue: Remember The Taper Tantrum? What’s My Duration? Bond Sector Performance
ALM Insights is focused on banks and other institutions that use their portfolio to manage risk on both sides of their balance sheet. It takes an in-depth look at securities investment strategies, balance sheet and asset/liability strategies, regulatory topics and general economic information. To view this issue, click the image below. In This Issue: The Plan to Wind Down Fannie and Freddie Economic Analysis – Fed Digests Mixed Data Bond… Read More
Markets closed lower on Friday, but were up strongly for the week. The S&P 500 was up 1.38 percent, the Russell 2000 was up 1.04 percent, the MSCI ACWI ex US was up 0.23 percent and the Barclays Aggregate bond index was up 0.18 percent last week. Please note that I’ve made an index change from the MSCI EAFE to the MSCI ACWI ex US index starting today. The reason… Read More
