Tag Archive: Monetary Policy
Schaetze To That
When Mario Draghi sat down for his scheduled press conference on April 4, 2012, it was a key moment and he knew it. The ECB had finished up the second of its “massive” LTRO auctions only weeks before. Draghi was still relatively new to the job, having taken over for Jean-Claude Trichet the prior November amidst substantial turmoil.
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Your Unofficial Europe QE Preview
The thing about R* is mostly that it doesn’t really make much sense when you stop and think about it; which you aren’t meant to do. It is a reaction to unanticipated reality, a world that has turned out very differently than it “should” have. Central bankers are our best and brightest, allegedly, they certainly feel that way about themselves, yet the evidence is clearly lacking.
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The Obligatory Europe QE Review
If Mario Draghi wanted to wow them, this wasn’t it. Maybe he couldn’t, handcuffed already by what seems to have been significant dissent in the ranks. And not just the Germans this time. Widespread dissatisfaction with what is now an idea whose time may have finally arrived.
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Monthly Macro Monitor: Does Anyone Not Know About The Yield Curve?
The yield curve’s inverted! The yield curve’s inverted! That was the news I awoke to last Wednesday on CNBC as the 10 year Treasury note yield dipped below the 2 year yield for the first time since 2007. That’s the sign everyone has been waiting for, the definitive recession signal that says get out while the getting is good.
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New monetary policies for new challenges
As central banks try (yet again) to bolster faltering growth and inflation, it is important to grasp how the ‘style’ and aims of monetary policy-making have changed over time and how they need to evolve in the future.The world is being disrupted by structural trends such as populism, demographic and climate change and technological innovation.
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What Does It Mean That Real Estate, Not Equities, Is Driving Monetary Policy?
In the world of assets classes, I don’t believe it is equities which hold the Federal Reserve’s attention. After the 2006-11 debacle, the big bust, you can at least understand why policymakers might be more attuned to real estate no matter how the NYSE trades. It may be a decade ago, but that’s the one thing out of the Global Financial Crisis which was seared into the consciousness of everyone who lived through it.
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Living In The Present
It’s that time of year again, time to cast the runes, consult the iChing, shake the Magic Eight Ball and read the tea leaves. What will happen in 2019? Will it be as bad as 2018 when positive returns were hard to come by, as rare as affordable health care or Miami Dolphin playoff games? Will China’s economy succumb to the pressure of US tariffs and make a deal?
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Sometimes Bad News Is Just Right
There is some hope among those viewing bad news as good news. In China, where alarms are currently sounding the loudest, next week begins the plenary session for the State Council and its working groups. For several days, Communist authorities will weigh all the relevant factors, as they see them, and will then come up with the broad strokes for economic policy in the coming year (2019).
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Monetary Policy Assessment of 13 December 2018
The Swiss National Bank (SNB) is maintaining its expansio nary mo netary policy, thereby stabilising price developments and supporting economic activity. Interest on sight deposits at the SNB remains at –0.75% and the target range for the three-month Libor is unchanged at between –1.25% and –0.25%.
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Economics Is Easy When You Don’t Have To Try
The real question is why no one says anything. They can continue to make these grossly untrue, often contradictory statements without fear of having to explain themselves. Don’t even think about repercussions. Even in front of politicians ostensibly being there on behalf of the public, pedigree still matters more than results.
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Monthly Macro Monitor – November 2018
Is the Fed’s monetary tightening about over? Maybe, maybe not but there does seem to be some disagreement between Jerome Powell and his Vice Chair, Richard Clarida. Powell said just a little over a month ago that the Fed Funds rate was still “a long way from neutral” and that the Fed may ultimately need to go past neutral.
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Eurodollar Futures: Powell May Figure It Out Sooner, He Won’t Have Any Other Choice
For Janet Yellen, during her somewhat brief single term she never made the same kind of effort as Ben Bernanke had. Her immediate predecessor, Bernanke, wanted to make the Federal Reserve into what he saw as the 21st century central bank icon. Monetary policy wouldn’t operate on the basis of secrecy and ambiguity. Transparency became far more than a buzzword.
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‘Mispriced’ Bonds Are Everywhere
The US yield curve isn’t the only one on the precipice. There are any number of them that are getting attention for all the wrong reasons. At least those rationalizations provided by mainstream Economists and the central bankers they parrot. As noted yesterday, the UST 2s10s is now the most requested data out of FRED. It’s not just that the UST curve is askew, it’s more important given how many of them are.
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Global Asset Allocation Update
The risk budget is unchanged this month. For the moderate risk investor the allocation to bonds and risk assets is evenly split. There are changes this month within the asset classes. How far are we from the end of this cycle? When will the next recession arrive and more importantly when will stocks and other markets start to anticipate a slowdown?
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And Now For Something Completely Different
Back in February, Japan’s Cabinet Office reported that Real GDP in Japan had grown in Q4 2017 for the eighth consecutive quarter. It was the longest streak of non-negative GDP since the 1980’s. Predictably, this was hailed as some significant achievement, a true masterstroke of courage and perseverance. It was taken as a sign that Abenomics and QQE was finally working (never mind the four years).
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Transitory’s Japanese Cousin
Thomas Hoenig was President of the Federal Reserve’s Kansas City branch for two decades. He left that post in 2011 to become Vice Chairman of the FDIC. Before that, Mr. Hoenig as a voting member of the FOMC in 2010 cast the lone dissenting vote in each of the eight policy meetings that year (meaning he was against QE2, too). This makes him, apparently, the hawk of all hawks.
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China Going Boom
For a very long time, they tried it “our” way. It isn’t working out so well for them any longer, so in one sense you can’t blame them for seeking answers elsewhere. It was a good run while it lasted. The big problem is that what “it” was wasn’t ever our way. Not really. The Chinese for decades followed not a free market paradigm but an orthodox Economics one. This is no trivial difference, as the latter is far more easily accomplished in a place...
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