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 >
Joseph Brusuelas
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 >
How many jobs need to be sacrificed to tame inflation? Cost is rising, RSM models show.
Under our base case, a loss of 2.5 million jobs is consistent with a 5.1% unemployment rate, 3% inflation and a likely recession under current economic conditions. … READ MORE >
Global financial stress: Credit Suisse to borrow $53.7 billion from Swiss central bank
The infusion by Swiss National Bank calmed global markets, but financial stress remains elevated and is likely to build in the near term as the crisis of confidence in global banks endures. … READ MORE >
It’s a matter of trust: Financial conditions tighten on stability risks
The RSM US Financial Conditions Index sits at 1.4 standard deviations below neutral, indicating increases in volatility and risk priced into financial assets. … READ MORE >
February CPI: Balancing price stability vs. financial stability as inflation remains elevated
Inflation in the United States accelerated modestly in February, increasing by 0.4% on the month and by 6% on a year-ago basis. … READ MORE >