monetary policy

2018 has started with a lot of angst about bond yields. And there is some cause to be concerned. But this owes to an economy that is growing more briskly and to the Fed that has been and probably will be more hawkish than you think.

There hasn’t been inflation in the economy since the early 1980s. It collapsed with the end of the Soviet Union and with the rise of China as a supplier for consumer goods.

The investment climate is being shaped by two powerful forces.  First is the very accommodative policy stance.  In addition to the accommodative monetary policy, fiscal policy is also supportive. 

The working economic model in North America and Europe is one in which the central bank and the fiscal agents are working at cross-purposes, with the central bank doing the heavy lifting if stimulus is desired.

The European PMIs that came out today showed an EU economy that is not just in full recovery mode, but booming. Likely the ECB will reduce its level of accommodation in line with this growth.

In the week ending December 23, initial jobless claims were just 245,000, keeping the average below 240,000 yet again. With claims still below year ago levels, there are no signs in the data that a US slowdown is coming. As a result, we may…

Markets seem to think the Federal Reserve’s recent policy statement and Chair Yellen’s subsequent press conference comments were dovish. This is a misread that I believe will have a meaningful impact on fixed income markets. The big…

The biggest takeaway from Chair Yellen’s press conference was her belief that there is “reason to think the relationship between the slope of the yield curve and the business cycle may have changed.” To me, this suggests that some Fed…

As the Federal Reserve meets today to decide how to communicate its messaging on future rate hikes and balance sheet reduction, financial stability will play a key role. The risk of overheating was real. So let’s put some framing around…

Given where we are right now, I think this expansion will continue through the end of 2018. And I want to talk about what that means in the context of my last post and recent BIS warnings on financial markets.