Jonathan's Feed
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 4, 2015

Fed’s Yellen says met firm at heart of leak probes

WASHINGTON/NEW YORK (Reuters) – U.S. Federal Reserve Chair Janet Yellen met with a research firm that later published confidential information from the central bank, she said on Monday.

Yellen met with Medley Global Advisors in June 2012, she said in a letter, months before the firm unveiled details of a September Fed meeting a day ahead of the publication of the central bank’s own record of the discussions.

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

Mester says June ‘on the table’ for possible Fed rate hike

PHILADELPHIA (Reuters) – The Federal Reserve is getting close to the appropriate time to raise interest rates and all scheduled policy meetings, including one in June, are “on the table” for a move, a top Fed official said on Friday.

Cleveland Fed President Loretta Mester, who in the past has urged a rate hike before mid-year, told reporters that the decision will hinge on incoming economic data and, in particular, on employment reports for the months of April and May.

Apr 30, 2015

New York Fed’s top bank regulator to step down

NEW YORK (Reuters) – Sarah Dahlgren, the New York Federal Reserve’s head of financial supervision, will step down from her position in October and retire by year-end.

Dahlgren’s team of bank examiners directly oversees the country’s top banks, acting as the U.S. central bank’s eyes and ears on Wall Street. The examiners have been accused of lax oversight in recent years.

Apr 30, 2015

Wage history signals U.S. employment nearly as good as it gets

NEW YORK, April 30 (Reuters) – If history is any indication,
U.S. unemployment may not fall much further after one of the
most reliable measures of wage gains jumped in the last quarter,
giving the Federal Reserve another reason to soon raise interest
rates.

Over the last three decades, the Employment Cost Index,
which is the broadest measure of U.S. labor costs and therefore
one of the Fed’s key guides as it mulls a rate hike, has begun
to climb a year or a bit more before unemployment fell through
an equilibrium level known as its natural rate.

Apr 23, 2015

Market liquidity drought raises alarm bells inside Fed

WASHINGTON/NEW YORK, April 23 (Reuters) – Sections of the
U.S. financial system that may be vulnerable to investor panic
are raising concerns inside the Federal Reserve, as policymakers
preparing for the first interest-rate hike in nearly a decade
seek to ensure the market is ready and able to handle it
whenever it happens.

Years of Fed bond-buying and new bank rules are seen to have
left the ultra-liquid U.S. Treasuries market more vulnerable to
an abrupt selloff. But in particular, the Fed is worried whether
the booming asset management industry can withstand a run of
redemptions in a financial crisis.

Apr 23, 2015

Fed eyes ability of asset managers to repay in a panic

WASHINGTON/NEW YORK (Reuters) – Sections of the U.S. financial system that may be vulnerable to investor panic are raising concerns inside the Federal Reserve, as policymakers preparing for the first interest-rate hike in nearly a decade seek to ensure that the market is ready and able to handle it whenever it happens.

The Fed is particularly worried about whether the booming asset management industry can withstand a run of redemptions in a financial crisis.

Apr 20, 2015

Bank of Canada’s January rate cut seems enough -Poloz

NEW YORK, April 20 (Reuters) – The Bank of Canada’s January
interest-rate cut appears to have helped the economy get back on
track, bank Governor Stephen Poloz said on Monday, repeating his
view that the cut provided enough “insurance” against the impact
of dropping oil prices.

It is a message he has delivered several times over the past
week, including last Wednesday, when the bank issued a statement
keeping rates on hold, and the market has gradually reduced its
bet on another rate cut this year to a 35 percent
chance.

Apr 16, 2015

Fed’s Mester makes case for U.S. rate hikes sooner than later

NEW YORK, April 16 (Reuters) – The Federal Reserve should
begin a gradual series of interest rate hikes “relatively soon”
as long as the economy rebounds from a soft first quarter, since
the benefits of delaying are running thin, a top Fed official
said on Thursday.

Cleveland Fed President Loretta Mester, a newer but
influential policymaker at the central bank, painted an
optimistic picture of the U.S. economy and delivered a
three-pronged thesis for starting to tighten policy sooner
rather than later.