The past few weeks in the U.K. financial markets have been extraordinary. The risk premium placed on the issuance of public and private debt has roiled both domestic and global financial markets. The demise of the Truss government and the prospect of a new prime minister with a more fiscally ... READ MORE >
Joseph Brusuelas
As turmoil grows, foreign banks and investors flock to the dollar
Intensifying financial stress and increased volatility have shaken global markets and stimulated a move of capital into the safety of the American dollar. Whether it is the purchase of short-term Treasury notes, the depositing of cash in U.S. financial institutions or a greater use of the Federal ... READ MORE >
End of an era? Bond market selloff prompts a new regime
The dramatic fiscal and monetary response to the pandemic has elicited a structural break in globalization, growth and liquidity regimes that have driven the world's economies over the past 25 years. Gone is the hyper-globalization that was the primary driver of low inflation and low interest ... READ MORE >
As the U.S. dollar surges, the potential for a currency crisis grows
The liquidity crunch driving the withdrawal of bond purchases by global central banks is creating the conditions of a classic policy quandary that is stoking international financial instability. The challenge in balancing growth, inflation and financial stability is now being exacerbated by ... READ MORE >
Inflation remains hot, sticky and elevated, implying another supersized rate hike
Both top-line and core inflation remain hot, sticky and elevated, which implies that the path of monetary policy demands another supersized rate increase of 75 basis points at the Federal Reserve’s November meeting. The September Consumer Price Index increased by 0.4% on the month and was up by 8.2% on ... READ MORE >
RSM UK Financial Conditions Index implies rising risk of instability
The RSM UK Financial Conditions Index is warning of a dramatic increase in credit risk that, along with the depreciation of sterling, has the potential to derail commercial activity in the United Kingdom. Growing financial stress has exposed the difficulties that global central banks face in ... READ MORE >
U.S. jobs report: Hiring slows as another 75-basis-point rate increase looms
The U.S. economy is proving far more resilient in the face of sustained pricing pressures than otherwise thought a short time ago. The economy added 263,000 jobs in September, slower than the 315,000 jobs in August but still a sign of a resilient labor market, according to Labor Department data ... READ MORE >
Amid global economic turmoil, stress grips fixed-income markets
Regime change in the global financial markets and the international economy is in play. Investor and policy expectations around globalization, growth and liquidity are all rapidly changing as central banks lift interest rates to put inflation back in the box. It is highly likely that the American ... READ MORE >
Fed raises its policy rate by 75 basis points and sees more increases
In the face of growing pressure from policymakers and investors to pause, pivot or even cut its policy rate, the Federal Reserve on Wednesday demonstrated why its independence is the sine qua non of monetary policy. The Fed raised its policy rate by three quarters of a percentage point, to a range of ... READ MORE >
Are we entering an era of central bank intervention in currency markets?
Over the past week, the Bank of Japan has conducted what Is known as a rate check, or a formal inquiry into the buying or selling price of the Japanese yen. This rate check has been done in preparation for a possible intervention into foreign exchange markets to prop up the declining ... READ MORE >