A major focus point for investors this week is the two-day Federal Reserve policy meeting, with markets expecting the central bank to press ahead with a sharp rate hike and formally announce the launch of a much-anticipated balance sheet runoff. The Federal Open Market Committee (FOMC) is scheduled to meet on May 3–4, with remarks…
Fed Meeting in Focus as Expectations Build for Sharp Rate Hike, QT to Fight Inflation
Perma-Bulloney
Commentary The economy is faltering, and markets are becoming chaotic. In spite of this, the mainstream financial media is busy convincing investors that the bull market is solidly intact. The 10-2 Treasury yield curve inverted on Tuesday, March 29. This inversion occurred for the first time since September 2019. Meanwhile, the 30–5-year Treasury yield spread…
The Failure of Central Banking: Quantitative Tightening
Commentary For every action, there is an equal and opposite reaction. – Newton’s third law of motion When central banks enacted their asset purchase (QE) programs and started to create the most preposterous asset market bubble in history, it was obvious that there will be a point, when they need to start selling assets from their…
The Failure of Central Banking: Quantitative Easing
Commentary The world economy has been on a perilous road for over a decade. The Global Financial Crisis (GFC) that hit the world in full force in September 2008 led central bankers and the government to issue extra-ordinary measures to stop the financial sector from melting down. Governments, for example, issued blank guarantees to bank…
Quantitative Tightening is a Nothingburger
Commentary Markets are in a state of heightened anxiety as the Federal Reserve is shifting to a tightening stance with an abruptness not seen in decades. Since just last September, the Federal Funds rate expected to prevail in mid-2023 has increased by 1.25 percent according to futures markets. While rapidly shifting its market guidance on…
Quantitative Tightening Won’t Stop Price Inflation
Commentary Markets reacted badly last week to Federal Reserve chairman Jerome Powell’s statements outlining the Fed’s initial forecast for the coming year. With inflation clearly no longer being “transitory,” with the Consumer Price Index accelerating to 7 percent in December, Powell has turned increasingly hawkish. Apart from seeming to confirm a series of rate hikes for 2022,…
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