How an Increase in the Producer Price Index Affects the Economy
The October Producer Price Index rose 0.4% month-over-month, and it was unchanged compared to the September reading. On a year-over-year basis, the index has risen 2.8%.
Securities
Market Realist has the latest news and analysis on debt securities, from bonds to exchange traded notes.
Here’s What Drove Consumer Expectations Lower in November
The University of Michigan Preliminary Consumer Sentiment for November was reported at 97.8, which was 2.9 lower than the final October reading of 100.7.
IMF: Why US Economic Growth Could Slow
The International Monetary Fund (or IMF), in its “World Economic Outlook” (or WEO) released in October, upgraded the economic forecast for the United Statess for 2017.
Did Job Openings Rise in September?
The Job Openings and Labor Turnover Survey (or JOLTS) report for September came out on November 7. Job openings remained unchanged at 6.1 million as of the last business day in September.
Why the Bank of England Wants Inflation to Fall
The central bank said that the key reason for such sharp increase in prices was due to the depreciation of the British pound after the Brexit referendum.
Bank of Japan Thinks the Inflation Target Can Be Achieved by 2019
For Japan’s economy, the main struggle has been the low level of inflation. Japan’s inflation has been low for the past three decades.
Janet Yellen: A Key Question for the Future
In a speech at the 2017 Herbert Stein Memorial Lecture, Fed Chair Janet Yellen shared her thoughts on monetary policy for the future and discussed whether there will be any role for unconventional policy again.
Janet Yellen Balance Sheet Strategy a Closer Look
Fed Chair Janet Yellen, in her speech at the 2017 Herbert Stein Memorial Lecture, offered some more insight into the Fed’s balance sheet reducing strategy.
Will Tax Cuts Bump Up Treasury Yields?
Since early September, US ten-year and longer-dated paper has been falling. Rates for the US government ten-year bond jumped from 2.04% on September 7 all the way to 2.36% on October 10.
Update from the European Central Bank’s October Policy Statement
In the ECB’s (European Central Bank) October policy meeting, its laid out its plans for the QE (quantitative easing) program.
Why Expectations for Business Conditions Fell 50% in September
The October Conference Board LEI reported that average consumer expectations for business conditions for September are 0.37 above the mean.
Understanding the Leading Credit Index for September 2017
The Leading Credit Index is an economic model that’s modeled on the performance of six major financial market instruments.
Are Declining Yield Spread Worries Done for Now?
At the last FOMC (Federal Open Market Committee) meeting on September 20, 2017, Fed members decided to initiate a balance sheet normalization process starting in October.
Why the Fed Has Initiated Balance Sheet Normalization
Atlanta Federal Reserve president and CEO, Raphael Bostic, recently spoke at a conference about the Fed’s balance sheet normalization program.
Why a December Rate Hike Shouldn’t Be Taken for Granted
Not all members of the FOMC, according to the minutes of the meeting, were on the same page with respect to a December interest rate hike.
Why FOMC Members Aren’t Worried about the Market Reaction to Balance Sheet Trimming
The September meeting minutes indicated that the members underscored that the reduction in the Fed’s balance sheet would be gradual.
A Glance at Muni Bonds’ Performance in 2016
The performance of municipal bonds has fallen since the 2016 election, as President Trump’s tax reform and infrastructure spending plans have caused some concern among investors.
A Double Blow for Bond Markets?
The announcement of the GOP tax reform plan added to the pressure on bond markets.
Why FOMC’s Raphael Bostic Is Not Happy with Low Inflation Explanations
Bostic dealt with various reasons that have been cited as reasons for the lower level of inflation—even questioning the common ones.
FOMC’s James Bullard Has Three Questions for US Monetary Policy
Bullard said that the current growth rate in the US economy is likely to remain consistent with recent quarterly growth—near the 2% mark.
Could Rising Interest Rates Help the US Dollar?
Double dose of optimism for the US dollar The US dollar (UUP) was being written off before the beginning of September, as the Fed was expected to stay on hold and other major central banks were expected to start policy normalization. However, the Fed had a surprise in store for the market. The FOMC’s (Federal Open […]
Would Markets Be Prepared for a Central Bank Surprise?
Three central banks on a path to tightening After years of ultra-loose monetary policy, global markets are beginning to realize they may have to wave goodbye to easy money. In their efforts to save the global system from the 2007 financial crisis, and to revive economic growth, US, EU, UK, and Japanese central banks resorted […]
Understanding the Leading Credit Index
Understanding the Leading Credit Index The Conference Board LCI (Leading Credit Index), a constituent of the LEI (Leading Economic Index), is constructed based on the performance of six financial market instruments. These components track lending conditions in the US economy. Performance of the LCI Improving credit conditions are considered positive for the economy. When the LCI […]
Consumers’ Business Condition Expectations Continue to Improve
Consumer expectations for business conditions Consumer expectations data, which forms the only non-leading component of the Conference Board Leading Economic Index (or LEI), is collected through two different surveys. One of these surveys is conducted by the University of Michigan and Reuters, where consumer expectations for economic conditions in the next 12 months are collected, […]
How Credit Spreads May React to the Fed’s September Statement
Another rate hike in 2017 The FOMC’s (Federal Open Market Committee) meeting on September 20 changed the outlook for bond markets (BND). It suggested that the Fed could be looking at another rate hike by the end of this year, along with a balance sheet unwinding program. Gains in August inflation (TIP) boosted Fed members’ […]
Tracking the Conference Board Leading Economic Index
In this series, we’ll analyze each component of the Conference Board Leading Economic Index and understand its implications for the consumer discretionary (XLY), industrial (XLI), and housing (XHB) sectors and the overall market (SPY).
How Municipalities Can Prevent Cyber Attacks
One possible driver to action could simply be alerting the public through their local media outlets just what havoc can be, and has been, wrought by cyberattacks.
Ransomware Attacks Are on the Rise
We are all potentially at risk of cyberattack – directly or indirectly. When it comes to municipalities, this may not always be obvious to the average state or city taxpayer.
Why Rising Japanese Inflation Isn’t Good Enough for Bank of Japan
The BOJ’s (Bank of Japan’s) qualitative and quantitative easing (or QQE) programs and a negative interest rate are helping to slowly revive Japanese inflation.
Why Maturity Bonds Reacted Differently to the Fed’s September Statement
The Fed’s balance sheet has $4.4 trillion in bond market securities, and it intends not to reinvest a small portion of the maturing securities every month.
Do Markets Agree with Janet Yellen on Low Inflation?
In her post-meeting press conference, US Federal Reserve Chair Janet Yellen seemed less worried than expected about the current state of US inflation.
Why Is FOMC Starting to Unwind Its Balance Sheet without a Target?
In the September 20 meeting, FOMC (US Federal Open Market Committee) finally announced the start date of its balance sheet unwinding program.
Is the Uptick in August Inflation Enough for a Fed Hike in December?
Slow US inflation growth has been a concern for the US Fed and was one of the key reasons that the Fed raised interest rates only twice in 2017.
Will US Bond Yields Rally after the FOMC Statement?
The bond markets are the most impacted asset class by any changes to the Federal interest rates.
How Has the US Economy Fared since the Last FOMC Meeting?
Since the last FOMC meeting in July, economic conditions in the US have continued to improve.
Markets Are Confident on Fed Balance Sheet Trimming Announcement
In its efforts to revive the US economy from the Great Recession, the US Fed started purchasing US government-backed securities in 2008.
Does the Green Bond Premium Exist?
Despite the rapid rise in issuance, demand for green bonds continues to outshine supply. The excess demand for green bonds has led to higher returns.
The Bond Market’s Reaction to New Rate Hike Hopes
After three weeks of continuous falls, US bond yields rose in the week of September 10. The benchmark ten-year US Treasury yield (BSV) rose by 10 basis points to 2.20% but remains far from the December 2016 high of 2.64%.
Understanding the Ups and Downs of the US Dollar
The US dollar has been on a roller coaster ride over the last ten trading sessions. The US dollar (UUP) index hit a low of 90.99 on September 8.
Will the Sudden Rise in Inflation Change the US Fed’s Outlook?
The consumer price inflation (CPI) data reported on Thursday indicated an increase of 0.4% in August. The year-over-year rate improved from 1.7% to 1.9% for August.
Could the Federal Reserve Surprise the Markets in September?
The US Federal Open Market Committee (or FOMC) is scheduled to meet on September 19 and 20 to discuss the current economic climate in the US and to decide whether any monetary policy adjustments are necessary.
Stanley Fisher’s Solution for Low Interest Rates
Stanley Fisher, vice chair of the U.S. Federal Reserve, has shared his views on low interest rates and some solutions to get rates back to normal levels.
Here’s Why the US Inflation Rate Is Troubling the Fed
In its latest monetary policy statement, the Fed admitted it would take longer than expected for inflation to reach its 2.0% target.
Could the Fed Announce Balance Sheet Shrinking in September?
The Fed, in its efforts to normalize policy, announced that it is starting the balance sheet unwinding program soon.
A Look at Consumer Expectations amid Risk Aversion
Consumer expectations for business conditions Consumer expectations form the only component of the Conference Board Leading Economic Index (or LEI) based on business expectations. Referring to consumer expectations regarding future economic conditions, their measurement is an average of two surveys. One survey, conducted by the Conference Board, records consumer expectations for business conditions six months […]
What Financial Markets Predict for the US Economy
Understanding the Leading Credit Index The Conference Board Leading Credit Index (or LCI), which tracks lending conditions in the economy, is reported monthly. The index has six constituents: 2-Year Swap Spread (SHY) (real time) LIBOR[1.London Interbank Offered Rate] 3-month (SCHO) less 3-month Treasury-bill (VGSH) yield spread (real time) debit balances in margin accounts at broker dealers […]
Why Interest Rate Spreads Are Growing
Reduced odds for another rate hike in 2017 Fears of flattening yield curves and rising interest rates have completely vanished in recent weeks. The FOMC’s (Federal Open Market Committee) July meeting statement confirmed the concerns about lagging inflation (TIP), making another rate hike in 2017 less likely. Focus has turned to the Fed’s balance sheet reduction […]
Will the Fed Repeat Its Taper Tantrum Mistakes?
In this cycle of expansion after the great recession, the Fed has started the process of monetary tightening.
Will ECB’s Tightening Lead to Bond Market Sell-Off?
If the European economy continues to improve at the current pace, the QE program could be scaled down to 40.0 billion euros per month.
Here’s Why the British Pound Could Be Headed for Further Losses
The British pound (FXB) was one of the worst performers in the week ending August 18.
