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Feb 20, 2013
via MacroScope

The fallacy of Fed ‘profits’ (and ‘losses’)

Richard Fisher, the Dallas Fed’s colorfully hawkish president, enjoys touting the remittances that the central bank makes yearly to Treasury, earned, circularly enough, mostly on the returns of the Treasury bonds the Fed holds. Here’s Fisher in September 2010:

All the emergency liquidity facilities that the Federal Reserve instituted were closed down and did not cost the taxpayers of this great country a single dime. Indeed, last year, as we finished up this work, the Federal Reserve paid $47.4 billion in profits to the Treasury. Imagine that! A government agency that (a) created programs that actually worked as promised, (b) made money for the taxpayers in the process and (c) undid the programs – all in the space of about 28 months – once they had done their job.

Feb 19, 2013

Fed bond buys warranted despite improving economy: Lockhart

ATLANTA (Reuters) – The Federal Reserve’s latest monetary stimulus program is still appropriate through the end of this year given an anemic labor market despite the U.S. economy’s brightening prospects, a top Fed official told Reuters on Tuesday.

Atlanta Federal Reserve Bank President Dennis Lockhart, who is seen as a bellwether centrist at the central bank, said in an interview the avoidance of the so-called fiscal cliff earlier this year has removed some of the uncertainty that had weighed on the U.S. recovery.

Feb 11, 2013

Yellen says Fed taking ‘forceful action’ on economy

WASHINGTON, Feb 11 (Reuters) – The Federal Reserve’s
aggressive and ongoing easing of monetary policy is warranted
given the still-battered state of the U.S. labor market, Fed
Vice Chairman Janet Yellen said on Monday.

In an address to the politically influential AFL-CIO, the
nation’s largest labor group, Yellen, seen as a potential
successor to Fed Chair Ben Bernanke next year, focused on the
anomalously weak nature of the recent economic expansion.

Feb 11, 2013

Fed’s Yellen says Fed taking ‘forceful action’ on economy

WASHINGTON (Reuters) – The Federal Reserve is still aggressively stimulating an anemic U.S. economic recovery that has failed to bring rapid progress on employment, Fed Vice Chair Janet Yellen said on Monday.

In a rare address to the AFL-CIO, a politically influential labor union, Yellen, seen as a potential successor to Fed Chair Ben Bernanke next year, focused on the anomalously weak nature of the recent economic expansion.

Feb 8, 2013
via MacroScope

QE3 debate kicks into high gear: Get ready for an assembly line of Fed speeches

Is it full steam ahead for the Fed’s QE3 or is the U.S. central bank having second thoughts? Next week’s veritable assembly line of speeches from Fed officials could help answer that question. Vice Chair and possible Bernanke successor Janet Yellen kicks off the week with remarks to an AFL-CIO conference. She is followed by numerous regional Fed presidents, the bulk of them with hawkish tendencies: Esther George, Jeffrey Lacker, Charles Plosser and Dennis Lockhart on Tuesday, St. Louis’ James Bullard on Wednesday and Thursday, and finally, Cleveland Fed President Sandra Pianalto Friday. Oh, and the Fed’s regulatory point person, board governor Daniel Tarullo, testifies before the Senate Banking Committee on Thursday. The topic is a now-perennial one: “Wall Street Reform.”

 

Feb 8, 2013
via MacroScope

Fading productivity could hurt U.S. job growth

RBC economist Tom Porcelli is such a curmudgeon these days. Still, given that he was one of the few economists that accurately predicted the possibility of a negative reading on fourth quarter GDP, maybe it’s not a bad idea to listen to what he has to say.

This week, he expressed concern about a rapid decline in U.S. productivity – and that was before data showing U.S. nonfarm productivity fell in the fourth quarter by the most in nearly two years.

Feb 7, 2013

Fed’s Stein says low rates create risks, watching corporates

WASHINGTON, Feb 7 (Reuters) – An extended period of low
interest rates could create risks to financial stability, and
policymakers should keep an eye on junk bond and leveraged loan
markets for signs of excess risk-taking, a top Federal Reserve
official said on Thursday.

Jeremy Stein, a member of the U.S. central bank’s powerful
board of governors, said the current evidence is inconclusive.

Feb 6, 2013
via MacroScope

Surge in foreclosures strains social services in Philadelphia: Philly Fed report

In the wake of a historic housing crisis that has just recently begun showing signs of a turnaround, foreclosure counseling services are coming under strain. The foreclosure mess may be over for big banks, which recently settled with regulators for $8.5 billion.

Not so for homeowners, who continue to face a bureaucratic morass in dealing with lenders and servicers. According to a new report from the Philadelphia Fed, the city of Philadelphia’s already weak infrastructure for dealing with the fallout from the foreclosure crisis is fraying at the edges.

Jan 30, 2013
via MacroScope

Will the Fed adopt thresholds for bond buys?

Tim Ahmann contributed to this post

Suddenly top Wall Street firms are talking about the possibility that the Fed might adopt numerical thresholds for asset purchases, in the same way it has done with interest rates more broadly.

Writes Mike Feroli, chief economist at JP Morgan and a former NY Fed staffer:

Perhaps the most interesting element of Fed policy at the current juncture is how they communicate the conditions that will lead to a slowing or a halt in asset purchases. The speed with which the Committee produced the numerical threshold rate guidance is a reminder that the Bernanke Fed can get their homework done early, but even so we do not look for any news on this front next week.

Jan 30, 2013
via MacroScope

Goldman hones in on Fed statement watchword: “Initially”

It’s that time again: Fed watchers are already parsing possible changes to the January policy statement, even before it is released. Goldman Sachs economists in particular have identified one passage ripe for some type of tweak — one that could signal the appetite for continued bond buys:

With Treasury purchases under the new regime already underway, the statement that Treasury purchases would ’initially’ occur at a pace of $45 billion per month will have to be adjusted. If ‘initially’ is replaced with another modifier such as ‘at the present time’ rather than deleted, it would suggest downside risks to the size of     the Treasury program later this year.

    • About Pedro

      "Pedro da Costa has been covering economics and financial markets since 2001. He is currently based in Washington and focuses on the Federal Reserve and macroeconomic policy. Da Costa earned a Master's in international relations at the University of California San Diego and studied sociology and political science as an undergraduate at the University of Chicago and the London School of Economics. He grew up in Rio de Janeiro, Brazil."
      Joined Reuters:
      2001
      Languages:
      English, Portuguese, Spanish, French
      Awards:
      2011 Deadline Club Award from the Society of Professional Journalists' New York Chapter
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