Will the Rollback of Dodd-Frank Help the Real Estate Sector?
In a continued effort to deregulate the economy, President Donald Trump signed the Economic Growth, Regulatory Relief, and Consumer Protection Act.
Why Rosengren Thinks US Monetary Policy Tools Are Inadequate
In his keynote delivered at the tenth conference organized by the International Research Forum on Monetary Policy in March, Boston Federal Reserve president Eric Rosengren highlighted US policy tools’ deficiency in combating another recession.
How Existing Home Sales Trended in February
The United States National Association of Realtors (or NAR) releases a monthly report on the existing home sales (ITB) market.
Double Whammy: Rate Hikes and Balance Sheet Trimming
The US Federal Reserve has accumulated huge quantities of fixed-income (BND) securities as part of its three quantitative easing programs, QEs 1, 2, and 3.
How the FOMC Views the US Financial Situation
The FOMC staff review indicated that the US investor sentiment has improved in the inter-meeting period.
Changes to the Balance Sheet Unwinding Program
According to the latest communication from the Fed, the pace of the balance sheet unwinding program has been increased to $20 billion per month.
A Double Dose of Tightening from the Fed in 2017
In its December monetary policy statement, the Fed projected three interest rate hikes in 2018 and three in 2019, depending on the incoming economic data.
The FOMC’s View of the Equity and Bond Markets
The FOMC’s November meeting minutes deemed the bond market’s yield curve to be flattening between meetings. The report indicated that bond yields have risen since the September FOMC meeting for multiple reasons.
Households Think It’s a Good Time to Buy a Home
According to the latest report from NAR, existing home sales have risen 2% to a seasonally adjusted annual rate of 5.48 million in October.
Key FOMC Insights and the New Fed Chair
The US FOMC left rates unchanged after the November 2017 meeting, as expected, setting the stage for a potential rate hike in December.
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 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.
Why FOMC’s John Williams Sees No Impact of Balance Sheet Unwinding on Markets
In the long run, Williams said it would be difficult to predict how markets would react to the Fed’s balance sheet unwinding program.
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.
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.
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.
The Fed Could Announce Balance Sheet Reduction Plan in September
In its June meeting, FOMC (Federal Open Market Committee) members detailed plans to shrink the $4.5 trillion balance sheet.
Will the US Balance Sheet Unwind Affect the Markets?
After the July FOMC meeting statement was released, market participants came to believe that the Fed would begin the process of balance sheet normalization soon.
Will Market Shocks Really Be Minimal to Balance Sheet Unwinding?
In its June policy meeting, the Fed has signaled that it will stop replacing maturing securities and slowly reduce the size of its balance sheet.
Why FOMC Members Were Divided about Balance Sheet Shrinking
The FOMC June meeting minutes that were released on July 5, 2017, indicated that the FOMC members were divided over when to begin shrinking the Fed’s bloated balance sheet.
Fed Chair Yellen Warns about Its $4.5 Trillion Balance Sheet Unwinding
In her post-meeting press conference, Janet Yellen warned that the Fed could implement its balance sheet unwinding process soon if the economy continues to perform as expected.
Why Did Bond Yields Fall after the FOMC’s Meeting Minutes?
Bond (BND) traders weren’t prepared for the FOMC’s meeting minutes. Expectations were biased for a rate hike in the June meeting.
Will the Fed’s Balance Sheet Rebalancing Act Disrupt the Markets?
In Rosengren’s view, the markets can absorb the rebalancing of the Fed’s balance sheet only if the entire process is done gradually.
Your Update on the FOMC March Meeting Minutes
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.
Jeffrey Gundlach: Where’s the Bond Market Heading?
Gundlach observes that the two-year Treasury yield has bottomed out, while the five-year Treasury is also almost double its mid-2012 lows.
Why Student Debt May Not Affect the US Economy Like Sub-Prime
According to the White House Council of Economic Advisers, “Student debt is less likely to make a recession more severe or slow an expansion in the way that mortgage debt may have.”
Is Student Debt the Next Bubble to Hit the US Economy?
Many are likening the current student debt situation in the United States to the mortgage debt situation that led to the 2009 financial meltdown in the US economy.
Why Schlifske Prefers Mortgage REITs and High Yield Debt Instruments
John Schlifske believes the low growth environment will continue in the short term. In this environment, he thinks that the equity market may not yield high returns.
Why Investors Should Consider Mortgage-Backed Securities
In a webcast in April, Jeffrey Gundlach suggested that mortgage-backed securities are what investors should be looking at right now.
An Update on Fairholme’s Positions in Fannie Mae and Freddie Mac
Berkowitz believes that Fannie Mae and Freddie Mac entities are highly valuable and expects them to generate earnings of at least~$21 billion a year.
Must-know: Credit risk retention in securitization transactions
In its most basic form, securitization pools similar forms of debt—like credit cards, car loans, or real estate mortgages (IYR) (VNQ)—into special purpose vehicles (or SPVs). The cash flow from the debt in the SPV is divided into tranches. The tranches have different risk and return characteristics.
Why was indirect bidder demand for 30-year bonds higher?
The 30-year bond is the longest maturity Treasury security.
Kansas City Fed President—macroeconomics and monetary policy
While the massive bond buying program was an aggressive step taken by the Fed to stimulate the economy, the normalization and tightening process could be much more complicated.
Why Kocherlakota concludes that the FOMC is underperforming
Even among those who have jobs, the fraction of people working part-time but who would like to work more hours is higher than the historical average.
Must-know: How the Fed may deal with its bloated balance sheet
The Fed’s balance sheet size has bloated to $4.3 trillion as on May 14, 2014, compared to pre-crisis level of $870 billion seen on August 1, 2007.
How the Fed’s taper has influenced municipal bond issuance in 2014
Refunding volumes declined in the first quarter of 2014 to ~51% of total issuance. The ratio was ~63% in Q1 2013
April FOMC: Are you ready for clues of the Fed’s new guidance?
This week, the Fed’s third Federal Open Market Committee (or FOMC) meeting of the year will be held on April 29–30—always a market-moving event.
How to measure your portfolio’s interest rate risk with convexity
Portfolio durations differ from key rate durations, as even though the durations of two portfolios may match, both portfolios may differ in the maturity profiles of the bonds they comprise, which will result in differing key rate durations.
Must-know: Why invest your money in fixed income ETFs?
Fixed income as an asset class encompasses a variety of securities, including bills, notes, and bonds, syndicated loans, and structured products.
Richard Fisher explains why excess reserves can create velocity
Richard Fisher also discussed the impact of quantitative easing (or QE) on excess reserve balances held by depository institutions at his speech at the London School of Economics on Monday, March 24.
Is residential construction enough to fuel construction spending?
The U.S. Census Bureau of the Department of Commerce estimated construction spending in January 2014 at a seasonally adjusted annual rate of $943.1 billion.
Housing prices rise from 2013, helping builders like Toll Brothers
The S&P/Case-Shiller Home Price Index (or HPI) was released on Tuesday, March 25. The 20-city composite HPI recorded a gain of 13.2% year-over-year (not seasonally adjusted).
The Philadelphia Fed survey: Firms plan to invest in manufacturing
The General Activity Index increased by 15.3, indicating an increase in the manufacturing activity after the unusually cold winter.
Why Treasury and mortgage rate spreads hit historic highs
The interest rate spread between 10-year Treasury securities (IEF) and 30-year conventional mortgages (VMBS) was at historic highs at the end of 2008 and the beginning of 2009
Interest rate spreads for Treasuries and mortgage rates: A guide
The interest rate spread is the difference between Treasury yields (TLH) and interest rates on mortgages (VMBS). Interest rate spreads tend to widen in times of economic uncertainty.
Key drivers for mortgage and Treasury rates in early 2013
Bond markets across the risk spectrum—including Treasuries (TLT) and mortgage-backed security ETFs (MBB)—posted gains in the first four months of 2013.
Do mortgage rates follow movements in Treasury yields?
This series will analyze how mortgage interest rates have behaved with respect to Treasuries and the reasons for this correlation.
Why low interest rates have sparked record debt issuance
Improvement in the up/down ratio commenced one quarter prior to the formal demarcation of the end of the recession.