Policy

November 30, 2021

Fed Stokes Market Fears

Fed Chair Jerome Powell wants to take the phrase “transitory” out of the Fed’s vocabulary, a sign that America’s central bank has officially recognized the arrival — and temporary staying power — of inflation.

That’s not all, though. Powell also indicated his desire to wind down “large-scale bond purchases at its next policy meeting in two weeks,“  citing a strong economy. That would be a necessary first step to raising rates next year with the aim of warding off inflationary woes by the end of 2022. 🤞

Unfortunately, Powell’s choice words (and taper desires) generated fears which rippled throughout the market. Indexes were deep in the red, adding some points to one of the few corrections we’ve seen this year. 💔

With that being said, despite fears and reservations among investors over rising inflation/Omicron, leading indexes are down no more than 2.5% in the last five trading days. The only exception is the Russell 2000 index, which has fallen over 5.6% in the last week.

Related Articles

Related Articles

Diving Into December CPI

January 11, 2024

Given those figures, the notion that markets are somehow “crashing” or “correcting” feels a little bit overextended. 🤔

Learn More About...

You Might Also Enjoy

Economy

January 5, 2024

Jobs Data Dampers Q1 Rate Cut Odds

While the leading indicators of employment continue to point to a slowdown, coincident indicators like U.S. nonfarm payrolls and ADP employment data continue to surprise to the upside. For stock market bulls, that may be bad news as it takes hopes of a first-quarter rate cut off the table. 😞

As we’ve discussed, much of the market’s recent rally has come on the back of hopes that the Federal Reserve will cut rates as much as six times in 2024. Disinflation continues across most major metrics, but a tight labor market has kept consumers spending and the economy humming along. As a result, Jerome Powell and the Fed have been hesitant to loosen financial conditions too quickly.

Read It

Economy

December 12, 2023

Inflation Checkup Before FOMC Decision

Tomorrow, the Federal Reserve will make its last interest rate decision for 2023 and update its economic projections. With the market increasing its probability of rate cuts throughout the last few months, it will be a closely watched and discussed event. 👀

We’ll get producer prices tomorrow morning, but today’s focus was on the consumer price index.

Read It

Earnings

January 12, 2024

Banks Kick Off Earnings Season

The U.S. stock market kicked off fourth-quarter earnings season with its biggest banks. Let’s see what they had to say about the U.S. consumer and economy. 👇

Before jumping into individual company results, it’s worth noting the overarching theme was that 2023 was likely the peak for net interest income.

Read It

More in   Policy

View All

Policy

March 24, 2023

A “Meeting Of The Minds”

Investors’ game of “whack a mole” continues as banking sector fears continue. As one bank’s crisis is seemingly avoided, the market moves on to its next potential victim.

Today that victim was Deutsche Bank. The German lender’s shares extended their decline after a sudden spike in the bank’s Credit Default Swaps (CDS). This asset is essentially an insurance policy against the bank’s failure, so a jump in price means the market is pricing in a rising risk of failure.

Read It

Policy

August 25, 2023

Powell’s Poetic Jackson Hole Speech

Fed Chair Jerome Powell’s highly-anticipated Jackson Hole speech initially sent the market indexes lower before rebounding to close the week mixed. 📝

Although he acknowledged the progress higher monetary policy has made on inflation, he reiterated that prices are still above the central bank’s target. As a result, the Fed is prepared to raise rates further and intends to hold policy at a restrictive level until confidence improves that inflation is sustainably moving towards its target. ⏯️

Read It

Policy

June 28, 2023

Banks Pass Fed’s Stress Test

We all have stress in our lives. But according to the Federal Reserve’s annual stress test results, the largest U.S. Banks shouldn’t be one of them. 👍

This test aims to help ensure that large banks can lend to households and businesses even in a severe recession. They were implemented under the Dodd-Frank Act, a response to the 2008 financial crisis that saw the global property market implode and credit markets freeze.

Read It

Policy

March 23, 2023

Bears Lurk As Bankers Hike

The Federal Reserve’s 25 bp hike is getting all the attention this week, but several other central banks recently made policy decisions worth noting. 📝

The European Central Bank (ECB) raised rates by 50 bps to 3.00%;
The Swiss National Bank raised rates by 50 bps to 1.50%;
The Bank of England raised rates by 25 bps to 4.25%;
The Bank of Canada held rates at 4.50%;
The Bank of Japan held rates at -0.1%; and
Banco Central do Brasil held rates at 13.75%.

Read It