Tag: FOMC Minutes

In my previous post, I ended with the words, “Beware the Ides of March.” Well, if Janet Yellen and her friends on the Federal Reserve are to be believed, the Fed will raise interest rates on that day, and maybe several times after that later this year. Which leaves us with the uncomfortable thought of what happens to the bull market in stocks – and bonds, for that matter, too – that has been running virtually without interruption since the Fed dropped rates to zero back in 2008. Can the bulls continue to run without that prop?

If there were still any lingering doubts that the Fed would raise rates at its meeting next week, Yellen pretty much put those to rest in her speech in San Francisco last Friday. “At our meeting later this month, the [Fed’s monetary policy] committee will evaluate whether employment and inflation are continuing to evolve in line with our expectations, in which case a further adjustment of the federal funds rate would likely be appropriate,” Yellen said, adding that “the economy has essentially met the employment portion of our mandate and inflation is moving closer to our 2% objective.” That speech followed similar comments from several other Fed officials during the week. Continue reading "The Ides of March Approach" →

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?" →