Tag: Federal Open Market Committee (FOMC)

Why Doesn't The Bond Market Trust The Fed?

Posted on by George Yacik

George Yacik - INO.com Contributor - Fed & Interest Rates


The minutes of the Federal Reserve’s January 31-February 1 meeting released last week said we can expect another interest rate increase “fairly soon,” which many people think means at the March 14-15 meeting, just two weeks away. But the bond market doesn’t seem to be buying it. Why not?

According to the minutes, “many participants expressed the view that it might be appropriate to raise the federal funds rate again fairly soon if incoming information on the labor market and inflation was in line with or stronger than their current expectations or if the risks of overshooting the committee’s maximum-employment and inflation objectives increased.”

At her Congressional testimony a week earlier, Fed Chair Janet Yellen was even more hawkish, warning that “waiting too long to remove accommodation would be unwise, potentially requiring the FOMC to eventually raise rates rapidly, which could risk disrupting financial markets and pushing the economy into recession.” That doesn’t sound like someone who’s willing to wait until May, the Fed’s next monetary policy meeting after March (there’s no meeting in April). Continue reading "Why Doesn't The Bond Market Trust The Fed?" →

Revamping the Fed: The Time is Now

Posted on by George Yacik

George Yacik - INO.com Contributor - Fed & Interest Rates


Last November, shortly after the election, I wrote a column that discussed the “claustrophobic, one-dimensional, group-think atmosphere” at the Federal Reserve. “With just a couple of exceptions, everyone on the Fed, voting or non-voting, is an economist, teaches economics, or worked in the banking industry on one side or the other,” I wrote then. No business people, no small business owners, no one “who lives and works in the real world, who has to deal with the edicts the Fed hands down.”

“Wouldn’t that perspective – even one – be a useful new voice to be considered when making monetary policy?” I asked. Continue reading "Revamping the Fed: The Time is Now" →

3 Hidden Winners On Higher Interest Rates

Posted on by The INO.com Team

By: Joseph Hogue of Street Authority

Rising interest rates is one of the most oft-referred-to topics on Wall Street right now. Some see higher borrowing costs as the straw that could break the market's eight-year bull run while others see it as needed counter-weight to emerging inflationary pressures.

Members of the Federal Open Market Committee (FOMC) already expects three rate hikes this year, and we may see more monetary tightening than that if fiscal stimulus jump-starts the economy.

Bond investments and dividend-paying stocks have sold off on a 33% jump in the rate on the 10-year Treasury since the beginning of November. Existing bond prices drop when rates increase and investors fear that higher rates will draw others out of dividend stocks for the relatively safety in fixed-income. Continue reading "3 Hidden Winners On Higher Interest Rates" →

S&P 500: Prepare For Choppiness

Posted on by Lior Alkalay

Lior Alkalay - INO.com Contributor


After the S&P 500’s rather flat performance over the first three weeks of January, the Index has finally broken higher, pierced through the 2,280 resistance, and seems well on its way to surge above 2,300. So, the question of potential profit taking for the Index at this time may raise some eyebrows. But if we are to take the signals coming from the Federal Reserve over the past few weeks, this is exactly when we should be worried about profit taking and a jump in volatility for the Index.

While the S&P 500 (CME:SP500) was muddling through over the past few weeks, some attributed it to the protectionist stance of the new US president, e.g. the looming threat of a trade war with China, the risk of import levies and, of course, the latest events of this week. President Trump, in a characteristically dramatic fashion, announced the revocation of the Trans-Pacific Partnership Agreement and proclaimed his intention to renegotiate NAFTA, the North American Free Trade Agreement. And how did investors respond? By pushing the S&P 500 up and out of its stagnation and into a new high. Because, while investors are concerned about the risk of a protectionist trade policy, their concerns are somewhat soothed by Trump’s plan to slash the US corporate tax to 15% and boost infrastructure spending.

But what about the S&P 500 are the bulls ignoring? Continue reading "S&P 500: Prepare For Choppiness" →

So The Fed Raised Rates: Why Is the Market Acting Surprised?

Posted on by George Yacik

George Yacik - INO.com Contributor - Fed & Interest Rates


It never ceases to amaze me how some people still react to and hang on to the words of former authoritative figures long after they’ve ceased to be relevant.

The other day 76-year-old Martin Sheen – Charlie’s father, for those under 40 – led a group of liberal has-beens and C-list “celebrities” urging Republican members of the Electoral College not to authenticate Donald Trump’s election. Does Sheen really believe people still care about what he thinks, if they ever did? Guess so.

While I admit that Janet Yellen and the other members of the Federal Reserve have hardly reached Martin Sheen status as irrelevant, I have to wonder about the market’s reaction to Wednesday’s decision by the Fed to raise interest rates an entire quarter point. Why did anyone care? Continue reading "So The Fed Raised Rates: Why Is the Market Acting Surprised?" →