The manufacturing sector contracted for the fourth month in a row in March as the pace of the decline accelerated, according to ISM data. … READ MORE >
interest rates
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 >
Fed’s key gauges of inflation soften in February
Prices grew by 0.3% on the month; for the core component, they rose by 0.3% while the “super core” stayed at 0.3%. … READ MORE >
Jobless claims inch up while revised GDP shows softer growth
New filings for jobless benefits inched up to 198,000 last week from 191,000 earlier, staying below the pre-pandemic level, while fourth-quarter gross domestic product was revised down slightly from a 2.7% increase to 2.6%. … 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 >
Consumer sentiment fell in March, before the financial turmoil
Consumer sentiment for March dropped to 63.4 from 67 as consumers’ confidence in the current economic conditions and their expectations both worsened on the month, though the survey results did not reflect the recent turmoil in financial markets … 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 >