At the monthly meeting of the Federal Open Market Committee, the central bank kept its policy rate unchanged in a range between zero and 25 basis points. But it is clear we have entered the beginning of the end to the Fed’s emergency programs. … READ MORE >
Federal Reserve
FOMC preview: Growth and inflation and tapering, oh my!
The Federal Open Market Committee will leave its policy rate unchanged at its meeting this week, but that decision will mask an underlying shift in its economic projections and policies. … READ MORE >
CHART OF THE DAY: U.S. household net worth surges, but the gains are uneven
The net worth of U.S. households in the first quarter increased by nearly $5 trillion, or 3.8%, from the previous quarter to a record of $136.9 trillion. On an annual basis, that gain was $25.5 trillion, or 22.9%. But not all households benefited equally. … READ MORE >
What’s behind the recent decline in 10-year Treasury yields
The yield on 10-year Treasury bonds has dropped nearly 25 basis points to below 1.5%, touching 1.42% overnight on June 11 from its recent peak of 1.74% on March 31. … READ MORE >
April personal income and spending: Consumers push forward as demand for services surges
Demand for services jumped 1.1% in April as mass vaccinations accelerated, almost surely foreshadowing the coming surge in service spending that will be one of the defining narratives of the economy through the rest of the year. … READ MORE >
CHART OF THE DAY: Manufacturing sentiment remains high as global supply chain constraints cap growth expectations
Surveys carried out by four of the six regional central banks reported elevated manufacturing conditions, though there was some slippage from the lofty levels of the previous month. … READ MORE >
Forecasting the dollar in a post-pandemic world
We expect that the value of the greenback will experience notable volatility with modest downward pressure, causing the dollar to decline in value against major trading currencies. … READ MORE >
Interest rate update: Recent increase shows progress on the path to normalization
The yield on 10-year Treasury bonds is approaching 1.7%, within 20 basis points of already low pre-pandemic rates. The move higher is in response to signs of an economic recovery and perceived risks around inflation. But sub-2% 10-year interest rates are far from what a healthy economy would support. … READ MORE >
Frothy markets and the risk to the economic outlook in the era of low interest rates
The Bloomberg U.S. Financial Conditions Plus Index has reached 2.9 standard deviations above neutral, an unprecedented level that signals the possibility of froth in asset markets. … READ MORE >
Fed policy decision: Steady as U.S. economy at inflection point
The Federal Reserve made no substantial changes on Wednesday to the path of interest rates, its monthly $120 billion in asset purchases, overnight interest rates or interest paid on excess reserves. … READ MORE >