The Federal Reserve will obviously be in focus this week and we talk about the Fed and its members a lot and I suspect that not everyone quite knows how the Fed works. Today is a quick primer. The Federal Reserve System was created by the Federal Reserve Act in 1913 to serve as a formal lender of last resort to banks during panics and times of a liquidity crisis…. Read More
Since the election, interest rates have risen across the curve. The Federal Reserve raised short term interest rates last week for the first time this year, but perhaps more importantly, longer term rates have also risen, which means falling bond prices. Right now, the Barclays Aggregate Bond index is still positive for the year, but the gains are muted, especially compared to the 5.8 percent gain that they enjoyed just… Read More
In the third quarter last year, I wrote at least two articles that used the acronym ZIRP, which stands for ‘zero interest rate policy.’ At the time, all of the conversation was about how the Fed was ending ZIRP with their first interest rate hike in seven years. Today is the two-month anniversary of the hike and the discussion has moved from ZIRP to NIRP, which stands for ‘negative interest… Read More
So far, 2016 has been full of surprises, but most of the attention has gone to wildly volatile oil and stock prices. Less noticed, but equally important, has been the boost on bond prices, as seen by the dramatic fall in bond yields. The 10-year US Treasury note, the bellwether benchmark, started out the year yielding 2.27 percent, 10 basis points (a basis point is one hundredth of one percent)… Read More
Even though I was out of town last week on vacation, I generally keep my ear to the ground for market news and last week that was especially true because the Fed was expected to move one step closer to raising interest rates. For at least a year, the Fed has maintained that they would be ‘patient’ about the timing of raising rates. I assumed, like most people, that the… Read More
In the December 2012 issue of ALM Insights, I wrote an article titled Basel III’s AFS Provision. At the time of the article, the provision detailing the effects of Accumulated Other Comprehensive Income (AOCI) on regulatory capital had been delayed due to a “wide range of views”, and the final outcome was still very much up in the air. Few in the banking industry thought that forcing banks of all… Read More
