Posts belonging to Category FED



FED raises rates

“The economy is doing very well”

The Federal Reserve raised interest rates on Wednesday, a move that was widely expected but still marked a milestone in the U.S. central bank’s shift from policies used to battle the 2007-2009 financial crisis and recession.

In raising its benchmark overnight lending rate a quarter of a percentage point to a range of 1.75 percent to 2 percent, the Fed dropped its pledge to keep rates low enough to stimulate the economy “for some time” and signaled it would tolerate inflation above its 2 percent target at least through 2020.

“The economy is doing very well,” Fed Chairman Jerome Powell said in a press conference after the rate-setting Federal Open Market Committee released its unanimous policy statement after the end of a two-day meeting.

Britain unveils new fintech plans, including cryptocurrencies

G20:  no consensus for global regulation of cryptocurrencies

Britain announced a task force on Thursday to exploit the technology underpinning cryptoassets, such as bitcoin and other cryptocurrencies, as part of new plans to help fintech companies find more customers.

British finance minister Philip Hammond said he was committed to helping fintech grow and flourish by taking a series of domestic steps and forging links overseas.

“As part of that, a new task force will help the UK to manage the risks around cryptoassets, as well as harnessing the potential benefits of the underlying technology,” Hammond told a fintech conference hosted by the finance ministry.

Investors have flocked to cryptocurrencies like bitcoin despite wild price swings.

Regulators have warned that investors could lose all their money, but see promise in the blockchain technology that underpins cryptoassets.

Britain’s announcement comes after finance ministers from the Group of 20 richest economies (G20) were unable this week to find enough consensus for global regulation of cryptocurrencies.

http://www.reuters.com

U.S. jobless claims back off 48-year low

The labor market to be near full employment

The number of Americans filing for unemployment benefits rebounded last week from a more than 48-year low, but the trend continued to point to robust labor market conditions.

That was underscored by other data on Thursday showing job cuts announced by U.S.-based employers fell 20 percent in February. Federal Reserve officials consider the labor market to be near or a little beyond full employment. The tight jobs market is seen boosting wage growth and spurring inflation.

“The well looks increasingly dry to many companies seeking skilled workers, and time will tell whether the lack of labor will slow the overall economy in future months,” said Chris Rupkey, chief economist at MUFG in New York.

http://www.reuters.com…  March 09, 2018

Stocks or Bonds: What Happens When Rates Rise?

Basic rules

Although there are no specific rules about how bonds and dividend-paying stocks respond to rising interest rates, there are some broad tendencies you may want to consider, suggests Mary Ann Bartels, head of Merrill Lynch Wealth Management Portfolio Strategy.

With bonds, the “coupon rate” is the interest rate that an issuer uses to calculate regular interest payments to investors. The longer the term of a bond, the higher the coupon is likely to be; you’re paid more to wait longer to get your principal back. Higher risk, too, affects the coupon, with high-yield bonds from less solid companies offering more generous interest payments than you’ll get from higher-rated corporations or from U.S. Treasury bonds.

http://www.ml.com…  Febuary 23, 2018

Stronger Economy Boosts Chance for Rate Hikes

 Republican tax cuts enacted in December boost growth

Federal Reserve officials at their January meeting believed that a brightening global economic picture and the effects of recently passed tax cuts had raised the prospect for solid growth and continued interest rate increases.

The minutes of the Fed’s Jan. 30-31 discussions showed that the officials were more optimistic about the economy than they had been in December. They noted a stronger U.S. and global economy as well as expectations that the Republican tax cuts enacted in December would boost growth.

The minutes said “a majority of participants noted that a stronger outlook for economic growth raised the likelihood that further gradual policy firming would be appropriate.”

http://www.memphisdailynews.com…  Febuary 22, 2018

Inflation Is About to Appear ‘With a Vengeance,’

More Inflationary Pressures Building Up

Paul Tudor Jones said inflation is about to appear “with a vengeance” and may force the new Federal Reserve chair to accelerate interest-rate hikes. The hedge fund manager said policy has focused on a “low inflation problem” and years of near-zero rates amid economic expansion will have “painful” consequences. Policy makers should have been more aggressive in tightening policy and “rejecting the fiscal impropriety associated with this most recent tax cut,” he said.

http://www.bloomberg.com...  Febuary 07, 2018

Dow futures tumble over 400 points

Markets: Fasten your seat belts

The Dow has already plummeted more than 1,800 points over the previous two trading sessions. Monday was particularly brutal: the index tumbled a record 1,175 points. The 4.6% plunge was the Dow’s worst day since August 2011 and knocked it into the red for the year.
The tremors also spread to the other side of the globe, with stocks in Asia plummeting overnight. Japan’s Nikkei lost more nearly 5%, while stocks in Hong Kong dropped almost 4%.

http://www.cnn.com...  Febuary 06, 2018

Tax cuts could risk overheating the U.S. economy

Wages to quickly rise

New York Federal Reserve President William Dudley is worried new tax cuts could risk overheating the U.S. economy in the next few years.
Economic prospects in 2018 are looking “reasonably bright,” Dudley said in a speech to the Securities and Financial Markets Association on Thursday. He expects unemployment to remain low and wages to quickly rise.

But Dudley warned that central bankers may have to “press harder on the brakes” at some point in the next few years to help stave off a possible recession.
http://money.cnn.com/ … Fri., 12  January 2018

Global Debt Hits Record $233 Trillion

The ratio of debt-to-gross domestic product is now 318 percent

Global debt rose to a record $233 trillion in the third quarter of 2017, more than $16 trillion higher from end-2016, according to an analysis by the Institute of International Finance. Private non-financial sector debt hit all-time highs in Canada, France, Hong Kong, South Korea, Switzerland and Turkey.

At the same time, though, the ratio of debt-to-gross domestic product fell for the fourth consecutive quarter as economic growth accelerated. The ratio is now around 318 percent, 3 percentage points below a high set in the third quarter of 2016, according to the IIF.

http://bloomberg.com/ … Mon., 08  January 2018

SEC warns bitcoin, cryptocurrency investors at risk

Investors should “exercise caution”

The U.S. Securities and Exchange Commission warned Thursday that investors should “exercise caution” with cryptocurrencies like bitcoin, noting state and federal regulators may not be able to recoup any lost investments from illegal actors.

Many promoters of initial coin offerings (ICOs) and other cryptocurrency investments are not following federal and state securities laws, SEC Chairman Jay Clayton and Commissioners Kara Stein and Michael Piwowar said in a statement. While regulators are trying to police these quickly growing markets, the SEC urged investors to be vigilant.

http://reuters.com/ … Fri., 05  January 2018