Eric Rosengren, the President of the Federal Reserve Bank of Boston, was one of the three dissenters against the Federal Open Market Committee (FOMC) decision to keep the federal funds rate unchanged—the first time three members of the committee had dissented since December 2014. Previously known as reliably dovish, Rosengren has lately been one of the Fed’s loudest hawkish voices, in favor of incrementally beginning to hike rates now. He believes that waiting too long would risk financial instability. Read more about Rosengren's Warning 09-28-2016
A sign that we live in different times: The Bank of Japan (BoJ) set a rate target of zero for the 10-year bonds, another unprecedented move for the central bank that has failed to lift Japan out of decades-long stagflation despite several years of massive monetary stimulus via money printing and negative interest rates. So the BoJ changed its strategy. Read more about Surprisingly Dovish 09-21-16
Market volatility has risen in recent days. Day-to-day swings have been large. Today marks the first trading session since last Thursday that the S&P 500 did not move at least 98 basis points. Confusing messages from top Fed officials helped to throw markets for a loop.
Last Friday, President of the Federal Reserve Bank of Boston Eric Rosengren sparked the worst day for the market since Brexit by commenting that waiting to raise interest rates may increase the risk of overheating the U.S. economy. Read more about The Fed's Not-So-Reassuring Messages 09-14-16
As has often occurred in the “will they” or “won’t they”—the ongoing saga as regards the Fed’s interest rate policy—the economic data does not cooperate with the central bank’s desire to normalize rates. Less than one week after Fed Vice Chair Stanley Fischer stoked market worries that it may in fact raise interest rates twice this year, the incoming economic data again seems to make such a move difficult. Read more about A Familiar Scene 09-07-16
Fed Chair Janet Yellen’s speech at the annual economic symposium late last week went essentially as planned, as far as the markets are concerned. She said little that was surprising. She painted a picture of improving economic data that supports raising the federal funds rate. However, her overall speech still implied that there would likely be just one rate hike this year and that the Fed would still only tighten gradually. Read more about Fischer Surprises Markets 08-31-16
Over the past week, our indicators have, as a group, decidedly turned more negative. As you can see in our table below, three indicators now flash -2 while the rest, except for one, are at -1.
Our indicators now predict a negative bias in the near term, but it doesn’t mean the markets are about to crash. Read more about Indicators Turn Negative 08-24-16
The Fed released the minutes from its July Federal Open Market Committee (FOMC) meeting today, revealing more details into the decision makers’ thought process.
The notes show that the majority of committee members want to wait for more convincing economic data to show that inflation is moving toward the Fed’s 2-percent target before voting to raise the federal funds rate. Only a small minority felt that a rate hike was warranted in July. Read more about Waiting Through the Minutes 08-17-16