monetary policy

As the Fed raises rates, it will likely be surprised both by how fragile EMEs are and by the spillover impact Fed policy still has abroad

Policy divergence is the driver of market vulnerabilities. The longer the US stands alone in tightening policy, the greater the stress on the financial system.

Job growth has now begun a slight re-acceleration. If this trend holds, the unemployment rate will drop into the mid 3% range and the Fed will move to a fourth rate hike. The mix of continued job growth, tightening monetary policy, and late…

Global growth has been slowing. But we have plenty of time before a recession or financial crisis hits. My worries are about financial fragility caused by high asset prices and corporate releveraging.

The possibility of the Fed causing the curve to invert is real. We will have 12-18 months at most to see what happens economically.

Given what I know about the Fed's reaction function, I believe pre-conditions favor Fed tightening irrespective of the slope of the yield curve.

Federal Reserve governor Lael Brainard gave a speech on financial stability yesterday afternoon. The big takeaway is that the "Powell Put" is not very strong. The Fed will stress economic tailwinds and inflation concerns. And it will not…

Cleveland Federal Reserve President Loretta Mester has joined the chorus of Fed officials trumpeting hawkish views. Note her comments about financial stability and reloading the Fed's interest rate gun. At the margin, these variables…

Links on the Chinese reaction to tariffs, economic problems in Italy, the dangers of monetary offset for shares, and the importance of voter turnout for the midterm US elections.

Inflation is the controlling variable from here on out. Two rate hikes are effectively off the table for 2018 as a likely outcome. Fed projections will rise to four rate increases if inflation rises. And beyond 2018, expect Fed projections…