In its May statement, the Fed seems to have gone the extra mile to explain the slowdown in the first quarter.
After rising to almost two-week high price levels on May 3, the US dollar is stable in the early hours on May 4. The US dollar regained strength.
In its last meeting in March, the Fed increased interest rates (SCHZ) by 0.25% and sounded hawkish about the US economy.
The European Central Bank’s (or ECB) policy statement that was released on April 28 reported that the ECB left monetary policy unchanged, which was in line with expectations.
The first week of May is packed with key macro events. On the monetary front, we have the FOMC meeting scheduled during the week and the all-important April jobs numbers set to come out on Friday.
After a brief pullback on May 2, the US dollar is stable in the early hours on May 3. The dollar is moving higher ahead of the Fed’s interest rate decision.
After rising higher and pulling back on Wednesday, the US dollar is weaker in the early hours on April 27. The US dollar pared its profits on Wednesday.
Demand for fixed income securities will likely be subdued because of excess supply this week, which would mean additional support for bond yields.
After falling for two consecutive trading days, the US dollar started to recover and traded stable in the early hours on April 26.
Before Trump, markets had been gripped with anxiety whenever the US FOMC was approaching a decision about hiking the interest rate.
The Fed has started the rate normalization process only recently and has a long way to go before the rates come back to pre-Lehman-collapse levels.
Markets will be monitoring any comments from the Fed going forward, and every future meeting will likely be lively in terms of the possibility of another rate hike.
The minutes from the FOMC meeting on March 14 and 15 were reported on April 5 and revealed the tone of the conversation among members to be hawkish.
For investors in the top tax bracket, municipal bond (XMPT) yields on a tax-equivalent basis are roughly 5.0%.
Municipal bond issuance has been rising over the last few years. More refundings would cause the supply to rise further.
Municipal bonds were the worst-performing bond class in 2016 after solid returns in 2014 and 2015, and high-yield bonds (JNK) outperformed.
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