Correspondent, Chicago
Ann's Feed
Jun 4, 2015

Fed doves’ ranks may be growing, possibly pushing hike into 2016

SAN FRANCISCO (Reuters) – Federal Reserve Chair Janet Yellen insisted only two weeks ago that the U.S. economy remained on a path that would allow the central bank to raise rates in 2015 for the first time in nine years.

Now however, some of her colleagues are suggesting it might be better to wait until late this year or even 2016, citing concerns about the international economic outlook and U.S. consumers’ reluctance to open their wallets.

May 21, 2015

Fed minutes too detailed, can hinder policy debate, Williams says

PALO ALTO (Reuters) – Minutes of the Federal Reserve’s regular meetings have become so detailed and such a central focus for investors and the news media that the quality of policy debates may be suffering as a result, a top Fed official said on Thursday.

The Fed publishes minutes of its policy-setting meetings three weeks after the fact. While the minutes do not specify what individual policymakers said, they do describe whether views were expressed by “some” or “a few” or “many” members. Traders often use those characterizations to try and determine where monetary policy may be heading.

May 12, 2015

Wage growth may be on tap as more Americans quit jobs

SAN FRANCISCO (Reuters) – Americans are becoming more apt to quit their jobs, a government report showed on Tuesday, a sign that a stronger labor market and falling unemployment rate could result in healthier wage growth and inflation.

The three-month quit rate for non-government jobs rose to 6.6 percent, the report showed, the highest since the second quarter of 2008 and up from 6.5 percent in the final quarter of 2014. Both wages and inflation tend to follow a rise in the quit rate by a couple of quarters, research from the Chicago Federal Reserve Bank shows.

May 7, 2015

Wary of bond ‘cliff,’ Fed plans cautious cuts to portfolio

NEW YORK/SAN FRANCISCO (Reuters) – The Federal Reserve is sketching out plans to prevent an abrupt contraction in its massive balance sheet next year, when some $500 billion in bonds expire and risk disrupting markets and the U.S. economic recovery.

Though it ended a stimulative asset-purchase program last October, the Fed is still buying mortgage and Treasury bonds to replenish its $4.5-trillion portfolio as holdings mature. The central bank has said it will keep reinvesting until some time after it begins raising interest rates later this year.

May 1, 2015

Fed rate hike in June ‘on the table,’ two policymakers say

/PHILADELPHIA (Reuters) – The Federal Reserve could well raise interest rates as soon as June, two top U.S. central bankers said on Friday, so long as economic data strengthens as expected from a dismal first quarter.

That view – from the hawkish-leaning chief of the Cleveland Fed and from the centrist head of the San Francisco Fed – is at odds with the view of many traders, whose bets in the interest-rate futures markets suggest they have all but discounted a June rate hike and now expect the Fed to wait until December before raising rates for the first time since 2006.

May 1, 2015
via MacroScope

Monetary policy: New T-shirt needed?

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San Francisco Fed President John Williams  believes deeply that monetary policy is data-dependent, so much so that he has printed the mantra on T-shirts that he is giving away coast to coast. On Friday at Chapman University in Orange, Calif., however, he didn’t discuss the current state of U.S. economic data or the stance of monetary policy. Instead, he focused on why forcing the Fed to follow a strict monetary policy rule to make interest rate decisions would be, well, a problem (http://reut.rs/1bmCfvB). It’s a view that a number of his colleagues, including Fed Chair Janet Yellen, have publicly embraced. Monetary policy — it’s independent. Sounds like something you could put on a T-shirt.

May 1, 2015

CME Group suspends two gold futures traders for allegedly spoofing

By Ann Saphir and Tom Polansek

(Reuters) – CME Group Inc on Thursday suspended two
traders from its markets for allegedly colluding to enter orders
repeatedly with no intention of trading, a strategy that has
been fingered as a key contributor to the 2010 Wall Street flash
crash.

Heet Khara and Nasim Salim, both traders of CME Group’s gold
and silver futures contracts on its Comex exchange in New York,
are prohibited from trading for 60 days, according to a
disciplinary notice released by the futures exchange.

Apr 29, 2015
via MacroScope

As Fed’s statement shrinks, data looms larger

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Perhaps the most notable aspect of the Federal Reserve’s April statement is its brevity: at just 560 words, it’s the shortest post-Fed-meeting statement since October 2012.  In saying less about its much-anticipated first interest-rate hike, the Fed is nudging markets to pay attention to other stuff. Like, for instance, the April jobs report next Friday, and the May jobs report one month later. “The Fed is data dependent,” says Eaton Vance portfolio manager Eric Stein. “They’d like to get to a world where the market will react more to numbers rather than Fed meetings and statements.”

Apr 28, 2015
via MacroScope

Data isn’t as objective as the Fed might have you believe

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Fed officials say they will be “data-dependent” when it comes to making monetary policy. San Francisco Fed President John Williams feels so strongly about it, he’s even printed up a T-shirt to get that message across. But truth be told, data-dependency is not as objective as it sounds. Data doesn’t dictate policy; it’s the interpretation of data that’s key. What is rate-hike-worthy data to one policymaker is keep-the-pedal-to-the-metal data for another. Take, for instance, U.S. GDP growth. Richmond Fed President Jeffrey Lacker says he expects GDP growth to average 2 percent to 2.5 percent this year, a pace that would justify a Fed rate hike in June. Chicago Fed President Charles Evans expects 3 percent growth this year, and does not believe even that would justify a rate hike until the first half of 2016. So what does it tell you about monetary policy if you see GDP growth of 2.5 percent? Not a whole lot, judging from these two. And the statements of other Fed officials are hardly more helpful. Indeed, as Atlanta Fed President Dennis Lockhart said recently, “I don’t think it is advisable to approach such a decision with rigid quantitative triggers in mind.” Watch the data, sure. But don’t assume the data will tell you much about the exact timing of the rate hike. Monetary policy – it’s subjective. Maybe some policymaker will print that on a T-shirt.

Apr 24, 2015

Flash crash trader’s CME seat: bought for $435,000, now worth just $69,500

SAN FRANCISCO/CHICAGO, April 24 (Reuters) – The UK-based
trader accused by U.S. authorities of making more than $40
million manipulating markets and contributing to the 2010 Wall
Street flash crash was on the losing end of at least one trade:
his purchase of the CME Group seat that helped to make the
alleged scheme possible.

Navinder Sarao bought the seat in May 2008 for $435,000,
only a few months before the financial crisis hit, exchange
records show; it’s now valued at just $69,500, an 84 percent
decline. He still owns it, an exchange spokeswoman confirmed.