As flush households face the potential of an economic slowdown, they are reluctant to take on debt. Instead, households appear to prefer precautionary saving in contrast with overconsumption. … READ MORE >
Hiring cools in March as fears of a wage price spiral ease
The U.S. March employment report indicated that total jobs increased by 236,000, illustrating that hiring remains strong, albeit at a slower pace. The Bureau of Labor Statistics Friday report points toward easing concerns of a wage price spiral that underscores the direction of monetary policy as the Fed is poised to hike its policy rate by 25 basis points at its May 3 meeting. … READ MORE >
Bank deposit carousel continues as investors search for yield
The large gap between money market funds and bank deposit rates as well as what the banks themselves can obtain risk free at the Fed’s repo facility implies that cash will continue to move into the short end of the curve. … READ MORE >
RSM US Manufacturing Outlook Index: Slowdown continues
According to the RSM US Manufacturing Outlook Index based on those surveys, manufacturing activity remains at 1.8 standard deviations below normal. … READ MORE >
The great deposit migration, moral hazard and a fragmented banking system
The recent financial shock has exposed the underlying problem in the banking sector: A flawed regulatory framework treats small and medium-size institutions unequally compared to their largest competitors. … READ MORE >
The impact of expectations for Fed policy on the money and bond markets
Prices in the money market now suggest increased levels of risk being priced into short-term lending and the tightening of overall financial conditions that was missing until the recent banking turmoil. … READ MORE >
Catch-25: Fed hikes rates amid financial stability risk
The Federal Reserve finds itself as it lifted its policy rate by 25 basis points on Wednesday amid a quickly evolving global banking crisis. … READ MORE >
Financial shock sending Fed proxy rate into restrictive terrain
Should the crisis deteriorate further, with more bank seizures and further problems inside systemically financially important institutions, then the degree of financial shock is equivalent to 150 basis points of tightening. … READ MORE >
Coordinated central bank action follows the Credit Suisse-UBS merger
Global central banks acted over the weekend to stem dollar funding pressures in financial markets as investors digested the forced merger of Credit Suisse and UBS. … READ MORE >
The great deposit migration and emergency borrowing at the Fed discount window
In the past week alone, the Federal Reserve’s loans outstanding to the financial system have ballooned to about $318 billion, up from $15 billion a week ago. … READ MORE >