Jonathan's Feed
May 14, 2015

U.S. rejects Canada’s claim that Volcker rule violates NAFTA

By Jonathan Spicer

(Reuters) – The White House has dismissed the Canadian
government’s claim that a ban on some proprietary trading on
Wall Street violates a free-trade agreement, saying it has the
legal right to protect its financial system.

The U.S. response came after Canadian Finance Minister Joe
Oliver said on Wednesday that the so-called Volcker rule’s ban
on U.S. banks’ use of their own money to trade Canadian
government bonds probably did not comply with the North American
Free Trade Agreement.

May 13, 2015

Canadian minister says U.S. Volcker trading ban violates NAFTA

NEW YORK, May 13 (Reuters) – The U.S. ban on its banks doing
proprietary trading of Canadian debt likely violates an
international agreement between the nations, Canadian Finance
Minister Joe Oliver said on Wednesday, urging American lawmakers
to adjust the so-called Volcker Rule.

The rule, meant to curb risky Wall Street trading seen to
worsen the 2007-2009 financial crisis, would stop U.S. banks
from trading of non-U.S. government bonds with their own money
unless exemptions are met.

May 12, 2015

Fed’s ability to delay rate hike now ‘more limited’: Williams

NEW YORK (Reuters) – The Federal Reserve’s ability to delay its initial interest rate hike to head off economic shocks is now “more limited” than its ability to quickly tighten monetary policy in response to positive surprises, a top Fed policymaker said on Tuesday.

San Francisco Fed President John Williams, addressing economists in New York, added that he is now “reasonably confident” inflation will rise to the U.S. central bank’s 2-percent target over the medium term, and that the labor market would continue to improve.

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

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.