Vanguard Short-Term Infl-Prot Secs ETF
Must-read advice for investors considering TIPS
From TIPS to “phantom income” to varying distributions — Matt Tucker is here to explain what they are and how they are related.
Why May’s Inflation Was Just Hot Enough
On June 12, the US Bureau of Labor Statistics reported that US consumer prices rose 0.2% in May, adding to the 0.2% increase seen in April.
FOMC: We Are Not Declaring a Victory on Inflation
The FOMC’s June statement was released on June 13, and the outlook for inflation remained upbeat.
Why Does the Fed Expect Unemployment to Fall Further?
The US Federal Reserve has a dual mandate of achieving maximum employment and stable prices (TIP) in the economy.
How Could High Inflation Affect the Fed?
During the Fed’s May meeting, the inflation (TIP) target was described as “symmetric,” suggesting that the 2% target would not be used to initiate any dramatic changes to US monetary policy.
Why This Week Could Define the Direction of Monetary Policy
The central banks of the US, EU, and Japan are scheduled to meet this week.
What Now as the US Fed Is Close to Meeting Its Targets?
As of June 1, the unemployment rate in the US has dropped to 3.8%—its lowest level in the last 18 years.
This Economic Data Point Decreased the Odds of a 4th Rate Hike
In the current economic climate, we can expect the Fed to take a step back with respect to interest rate hikes.
Which Sector Posted the Most Job Gains in May?
As per the May ADP employment report, job growth in the professional and business services sector continued to be the key driver for jobs additions.
Why the FOMC Isn’t Confident about Sustained Inflation Growth
The FOMC’s May meeting minutes indicated that some of its members had turned bearish on inflation (TIP).
Key Takeaways from May’s FOMC Meeting Minutes
The most recent FOMC meeting was on May 1–2. At the meeting, the range for the federal funds target rate was left unchanged.
Could the US Dollar Slump Be Short Lived?
The US dollar depreciated against its major trading-partner currencies after the Bureau of Labor Statistics reported on May 10 that US consumer prices grew 0.1% in April after falling 0.1% in March.
Bond Yields Fall after April Inflation Data Release
US bond market investors were relieved after the US Bureau of Labor Statistics’ April report, published May 10, indicated a lower-than-expected inflation growth rate.
Why Equity Markets Rose after April’s Inflation Report
US indexes (SPY) are reaching highs as investors ignore possible threats of the US pull-out from the Iran nuclear deal and focus on increasing crude prices.
How April’s Inflation Data Relieved Markets
On May 10, the Bureau of Labor Statistics reported that US consumer prices rose 0.2% in April.
Could there be a 4th Rate Hike in the Cards?
The Bureau of Economic Analysis defines PCE (personal consumption expenditure) as the value of goods and services purchased by, or on behalf of, US residents.
Which Sector Posted Major Job Gains in April?
The US employment market could be overheating. Businesses are adding more than 200,000 jobs per month despite rising trade tension.
Why 1Q18 Real GDP Estimate Raises Chance of 4th Rate Hike
The Bureau of Economic Analysis (or BEA) released its first estimate for 1Q18 real GDP on Friday.
Key Macro Events This Week
US markets (IJH) will be tracking ongoing corporate earnings. US markets could be influenced by the multiple economic reports scheduled this week.
Why Rising Inflation Failed to Raise Long-Term Yields
The primary reason cited by the FOMC for holding off on interest rate hikes since 2016 was lagging inflation growth.
What Makes the Yield Curve Turn Flat or Invert?
The reason for the current yield flattening in this cycle is lower expectations for inflation growth.
US Job Openings Still Near Highs
The BLS released the “Job Openings and Labor Turnover Survey” for February on April 13.
Why Bond Yields Weren’t Affected by the March Inflation Report
US bond market investors are constantly concerned about inflation.
Why Rising Inflation Could Pose a Threat to Equity Markets
On April 11, market participants expected a volatile session after the US inflation report, but, to their surprise, Donald Trump’s tweet earlier in the day about Syria and missiles pushed markets lower.
Why March’s Inflation Numbers Could Pressure the Fed
The US Bureau of Labor Statistics has reported that US consumer prices fell 0.1% in March.
FOMC Members Are More Confident about Inflation
The March FOMC meeting minutes indicated that the staff and FOMC members turned bullish on inflation.
FOMC on the Economic Situation: A Strong US Economy
In the March meeting minutes, the FOMC staff review of the economy was stronger than the review presented at the January meeting.
How February PCE Inflation Data Could Affect Fed’s Decisions
Personal consumption rose 0.2% in February and by 4.6% in the last 12 months.
Is It Time for Fiscal Expansion?
An economy records a budget deficit when its annual revenue generated is lower than its expenditure.
Why the Fed Expects Unemployment to Fall to 3.6%
Over the last 12 months, unemployment levels have fallen to a 17-year low of 4.1%.
What’s the Fed’s View on Inflation Growth?
The FOMC’s March statement was released on Wednesday, March 21, and the outlook for the closely watched inflation remained muted.
Why Did the Fed Upgrade Its GDP Forecast for 2018?
In the latest SEP release, the Fed upgraded its GDP growth outlook for 2018 by 0.2% to 2.7%.
A Strengthening US Economy and a Cautious Fed
In the first policy meeting under new Fed chair Jerome Powell, the FOMC (Federal Open Market Committee) increased the interest rate 0.25%.
Could Increasing Job Openings Mean Trouble for Markets?
The Bureau of Labor Statistics released its JOLTS (Job Openings and Labor Turnover Survey) data for January on March 16.
Why Gradual Rate Hike Possibility Hurt the US Dollar
The US dollar depreciated against its major trading partner currencies after the US inflation (TIP) report was released on Tuesday.
Why Equity Market Spike after Inflation Report Could Be Short-Lived
The most awaited economic data release of the week proved to be risk positive, as inflation growth for the month of February was reported at 1.8%.
Why Odds of 4th Rate Hike Fell after February Inflation Report
The US Bureau of Labor Statistics reported that US consumer prices increased marginally in February.
Could the Lower 4Q17 GDP Estimate be Reason to Worry?
The US Bureau of Economic Analysis (or BEA) has released its second 4Q17 GDP estimate, projecting that the US economy increased at an annual rate of 2.5%.
Buffett’s Investment Advice When Inflation Rises
Warren Buffett has been a great believer in the equity market. His strategy of buying stocks after a dip has been fruitful for investors.
Why Buffett Believes Investing in Bonds Is a ‘Terrible Mistake’
The increasing demand for fixed income investments has pushed bond prices higher and yields lower, but investors have continued to pour money in.
Why FOMC Members’ View on Inflation Is Bad for Equity Markets
FOMC members have cited several factors that could increase inflation (VTIP) in the medium term.
FOMC’s Review of Economic Situation Signals Strong US Economy
As per the FOMC staff report, inflation (TIP) in the US remained below the 2% target.
January FOMC Meeting Minutes: ‘Further’ Hikes Possible
The recent market turmoil was related to the possibility that the US FOMC could increase interest rates sooner than expected.
Rising Inflation Could Add to Market Anxiety
Core inflation, which excludes volatile items like food and energy, surged to 0.34% month-over-month in January.
Key Updates from the January FOMC Meeting
The first FOMC meeting in 2018 ended on January 31, 2018. At this meeting, the Fed’s target interest rate range was left unchanged at 1.25%–1.50%.
How the Yield Curve Could Keep Flattening
Long-term yields (TLT) have not appreciated to the same extent as short-term yields, in response to interest rate hikes and changes to the dot-plot.
Could Personal Consumption Expenditures Growth Affect Rate Hikes?
Personal consumption expenditures increased 0.1% in December and 1.7% in 2017.
Personal Income in US Rose in 2017
As per the latest report from the BEA, personal income rose 0.4% in December, which took the annual rise to 4.1%.
Why Did the Consumer Price Index Rise in December?
According to the December CPI report released by the U.S. Bureau of Labor Statistics on January 12, consumer prices in December increased 0.1%.
Analyzing the Yield Curve’s Ongoing Flatness
A December rate hike and a flattening yield curve The Fed rolled out another rate hike at its final meeting of 2017. The target range for the federal funds rate was increased by 0.25% to 1.25%–1.50%, and the Fed has signaled three more rate hikes in 2018. Two members dissented to the rate hike due to lower […]
The Curious Case of Low Inflation in 2017
The last statement from the US Fed, which was released with its recent rate hike decision, cited lower levels of inflation but hopes that the inflation target could be achieved in 2018.
Will US Unemployment Rate Fall below 4% in 2017?
A lower unemployment rate is one of the key objectives of the Fed. In 2017, the unemployment rate fell, reaching 4.1% in its latest November reading.
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.
How We Could Avoid Yield Curve Inversion
Could yield curve inversion be avoided? St. Louis Fed president and CEO James Bullard gave a presentation at a regional economic briefing on December 1. Previously, we looked at the causes of yield curve inversion. In this part, we’ll review Bullard’s suggestions to avoid yield curve inversion. Bullard said that yield curve inversion could be avoided […]
The Primary Cause of Yield Curve Flattening
Interest rates and inflation The pace of interest rate hikes and inflation rate growth have a profound influence on the US yield curve. The US Fed has been communicating its intent to increase interest rates from the current ultra-low level to a target rate of 2.5% over the next few years. The conditions required for […]
Tax Cuts and Rate Hikes Could Impact the Fed
The proposed tax cuts and the resulting increase in the federal deficit are expected to impact bond markets. It’s important to consider the Fed’s stance.
Fed’s November Beige Book and Restrained Hiring Plans
The inability of employers to find suitable workers is leading to wage increases, especially in the professional, technical (XLK), and production (XLI) sectors.
Rising Price Pressures: A Sign of Relief for the Bond Markets?
The increase in price pressure, although reassuring for the Fed, might not lead to a higher rate of inflation in the short term.
Fed John Williams and a Brief History of Monetary Policy
In his speech at the 2017 Asia Economic Policy Conference on November 16, 2017, John Williams, CEO of the Federal Reserve Bank of San Francisco, spoke about the history of monetary policy.
Why Decreasing Credit Spreads Are a Cause for Concern
The November Conference Board report, which takes October data into account, reported the credit spread at ~1.2—an improvement from the September reading of ~1.1.
The FOMC’s Outlook for the US Economy
As per economic projections prepared by the FOMC, US real GDP is expected to improve in the final quarter of this year.
The FOMC’s View on the US Economy
At the November meeting, the FOMC staff review indicated that US labor market conditions continued to strengthen and that the US economy continued to expand at a solid pace.
The November FOMC Meeting Minutes: Must-Knows
The last Federal Open Market Committee (or FOMC) meeting took place on October 31–November 1. The target range for the federal funds rate stayed unchanged at 1%–1.25%.
Reading the Trends in Capacity Utilization across US Industries in October
Among the key macroeconomic indicators published by the Fed, capacity utilization in US industries helps investors forecast business cycle changes.
Chart in Focus: The Consumer Price Index Rose in October
The Fed is expected to increase the target funds rate by 0.25% at its December meeting.
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.
Why Bond Market Uncertainty Could Be Here to Stay
Investors in the bond market remain anxious that there has been no clear signal from the Fed.
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’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.
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 […]
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.
Inside the September FOMC Meeting: Key Updates
The FOMC (US Federal Open Market Committee) meeting that concluded on September 20 left many market participants surprised.
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.
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.
Will the US Fed Surprise Markets at Its September Meeting?
In this series, we’ll examine the improvements in the US economy since the last Fed meeting and discuss whether these developments could warrant accelerated tightening from the Fed.
Will Inflation and Unemployment Push the BOE to Raise Rates?
Inflation in the United Kingdom has been on a higher trajectory with consumer prices in the United Kingdom rising 2.9% in August year-over-year.
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.
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.
Why Improving Economic Conditions Aren’t Enough for the FED
In the last few months, the performance of the US economy has been impressive. The unemployment rate fell to 4.3% in August.
Will Yellen Present a New Fed View at Jackson Hole?
US Federal Reserve Chair Janet Yellen confirmed that she will be attending the 2017 Jackson Hole Symposium at the last minute.
Here Are the Short-Term Risks to the Bond Markets
The key risk faced by bond markets is a sudden fall in prices.
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.
How FOMC Members Assessed the US Economy in the July Meeting
FOMC members noted that labor market conditions have continued to strengthen since their last meeting in June.
Why Inflation Remains a Huge Concern for FOMC Members
Members of the FOMC (Federal Open Market Committee) attributed the recent slowdown in inflation growth to idiosyncratic factors.
Key Points of the July FOMC Meeting
At the last FOMC meeting on July 26, 2017, interest rates remained unchanged. The minutes of that meeting came three weeks later on August 16, 2017.
New York Fed President William Dudley Discussed Inflation
In his speech on August 10, New York Fed President William Dudley joined the group of FOMC members to ease concerns about slowing inflation (TIP).
Will US Inflation Revive Hopes for a Rate Hike?
The US inflation report, which was released on August 11, indicated that inflation has risen 1.7% YoY. Slowing inflation has been a concern for the Fed.
Can There Really Be a Bubble in the Bond Market?
Fundamentally, bonds (AGG) are a discount instrument and are generally never expected to be in a bubble. Let’s see why that’s the case.
How US Inflation Data Could Affect the Forex and Bond Markets
If Friday’s inflation numbers are below expectations, we can expect a further drop in bond yields and the US dollar (UUP).
International Monetary Fund Downgrades US Growth Forecast
US growth forecast In its July 23 update to its WEO (World Economic Outlook) report, the IMF (International Monetary Fund) downgraded its US growth forecast. Growth for 2017 has been revised to 2.1% from 2.3%, and to 2.1% from 2.5% in 2018. The IMF’s reasons for the downgrade included lackluster growth in the first quarter and […]
US Unemployment: The Fed’s Favorite Metric Continues to Improve
In a statement following the conclusion of its two-day monetary policy meeting, the FOMC stated that US labor market growth was solid.
Why FOMC Members Are Worried about Inflation
The Federal Reserve’s view on US inflation was a key driver of the market’s movements after the release of the FOMC’s July meeting statement on July 26, 2017.
Why the US Dollar Took a Hit after the FOMC’s July Statement
Most of the statement released by the Federal Open Market Committee (or FOMC) following its two-day monetary policy meeting was in line with the market’s expectations.
Why the Fed Isn’t Satisfied with Labor Market Conditions
Despite the strong growth in employment numbers, the Fed’s latest monetary policy report had some comments about slow wage growth.
Why Minneapolis’s Fed President Voted Against a Rate Hike
In an essay published by Minneapolis’s Federal Reserve president, Neel Kashkari, after he voted against a rate hike in the Federal Open Market Committee’s (or FOMC) June 2017 meeting, he explained why he dissented.
Why Philadelphia’s Fed President Supports Another Rate Hike
In a recent interview with The Financial Times, the hawkish president of the Philadelphia Federal Reserve said that the Fed’s balance sheet’s unwinding could begin in September 2017.
Why Chicago’s Evans Sees Moderate Risks to Financial Stability
Chicago’s Federal Reserve president, Charles L. Evans, recently spoke at a Money Marketeers of New York University event about monetary policy challenges in a new inflation environment.
St. Louis’s Bullard Thinks Rebalancing Will Take 5 Years
At the Illinois Bankers Association’s annual conference in Nashville, organized on June 23, 2017, St. Louis’s Federal Reserve president, James Bullard, sounded dovish about the US economy.