Tag Archives: Federal Reserve

On the question whether the Fed should seriously consider retail CBDC, the FT sides with the pro camp. While elsewhere such central bank digital currencies can appear “a solution in search of a problem”, America’s lacklustre retail banking system and the importance of the dollar in cross-border money flows make an obvious case for reform. Compare the contributions by Darrell Duffie and Chris Waller in the CEPR eBook.

Swiss Franc The Euro has fallen by 0.05% to 1.0424 EUR/CHF and USD/CHF, January 17(see more posts on EUR/CHF, USD/CHF, ) Source: markets.ft.com - Click to enlarge FX Rates Overview: Russia is thought to be behind the cyber-attack on Ukraine at the end of last week, but a military attack over the weekend may be underpinning risk appetites today. The dollar’s pre-weekend gains are being pared slightly. Led by the Canadian dollar and Norwegian krone, the greenback...

Overview:  US stocks built on the recovery started on Monday and Powell’s suggestion of letting the balance sheet shrink later this year eased some speculation of a fourth hike this year, which seemed to allow the Treasury market to stabilize.  What amounts to a greater appetite for risk is carrying over into Asia Pacific activity today. Many of the large bourses advanced more than 1%, with the Hang Seng up almost 2.8% and the Nikkei up  nearly as much.   Bond...

Gold price fell to $1,808 an ounce in the wake of the release of the minutes of the December Federal Reserve meeting, having hit an intra-day high of $1,829. Silver price fell to $22.72 an ounce from an intra-day high of $23.26. Gold and silver have continued to sell off this morning with gold trading as low as $1,794 and silver trading down to $22.14. The FOMC minutes showed a much more hawkish Fed than markets had been expecting. The minute suggests that the Fed...

The Omicron variant may be less fatal than the earlier versions, but it is disrupting economies. The surge in the Delta variant well into Q4 in the US and Europe was already slowing the recoveries. Investors will likely take the high-frequency real sector data with the proverbial pinch of salt until January data available beginning later this month. While the tribalist approach, exemplified by “team transition” and “team permanent” debates about inflation, the...

With the eurodollar futures curve slightly inverted, the implications of it are somewhat specific to the features of that particular market. And there’s more than enough reason to reasonably suspect this development is more specifically deflationary money than more general economic concerns. What I mean is, those latter have come later (“growth scare”) only long after the world’s real money truly began to dry up. Money then economy. How do we know? For one, sequence...

The central bank meeting cycle is over. Most of the important high-frequency data has been released until early January. The US debt ceiling has been lifted, avoiding an improbable default. A year ago, there was a sense of optimism, with a couple of vaccines being announced and monetary and fiscal stimulus boosting risk-appetites. Populism, which had been in the ascendancy after the Great Financial Crisis, seemed to be retreating in Europe and the United...

Basic intuition says this is a no-brainer. Producer prices rise, businesses then pass along these higher input costs to their customers in the form of consumer price “inflation” so as to preserve profits. This is the supply chain hypothesis. Statistically, we’d therefore expect the PPI to lead the CPI. And this was expected for much of Economics’ history, taken for granted as one of those self-evident truths (kind of like the Inflation Fairy). After the dreadful...

The Fed delivered what it was expected to do:  double the pace of tapering and project a more aggressive interest rate response with its individual forecasts.  The dollar initially rallied on the headlines, and new sessions highs were recorded, but the price action was a bit of a head-fake, as it were. The greenback's gains were quickly pared,  though it remained above JPY114 ahead of Chair Powell's press conference. The market had already discounted two hikes and...

The headlines last Friday were ominous: Inflation Hits Highest Level in Nearly 40 Years Inflation is Painfully High… Groceries and Christmas Presents Are Going To Cost More Inflation is Soaring.. America’s Inflation Burst This morning on Face The Nation, Mohamed El-Erian, former Harvard endowment manager, former bond king apprentice, economist and the man who seems to have a permanent presence on CNBC, had this to say: The characterization of inflation as transitory...