Watch Jerome Powell speak after the Fed’s decision to start slowing bond purchases this month
Koi Bowl starts
Federal Reserve Chairman Jerome Powell took the podium to start his press conference. The S&P 500 is up 0.1%, and the 10-year Treasury yield is trading just under 1.6%.
– Jesse Pound
JP Morgan’s Kelly believes the Fed will wait until the end of 2022 to raise
“I don’t expect a rate hike in July or September, what I think they’re trying to do is leave some space between when they finish tapers (and) when they start to tighten because they always tried to say “Those are two distinct things.”
“I think that means they will wait until the last meeting of 2022 just as they have done in the last decade… to really raise prices.”
-Rich Mendes
The 10-year Treasury yield is 1.6%.
The 10-year Treasury yield is gaining traction as investors digest the Federal Reserve’s statement. The benchmark yield climbed to 1.6% after trading near 1.56% by 2pm
– Jesse Pound
The Fed has indicated that it will not be in a hurry to raise interest rates
“The fact that they have continued to describe inflation as temporary suggests that they will continue to stay lower for longer than many expect,” said Michael Aaron of State Street Global Advisors.
-Batty Doom
Federal Reserve retains ‘temporary’ language in statement
The Fed’s policy statement maintained its “temporary” language regarding inflation. Some investors and strategists have speculated that the central bank will abandon this language as inflation continues to rise.
“Inflation is high, which largely reflects factors that are expected to be transitional. The imbalance in supply and demand associated with the pandemic and the reopening of the economy contributed to significant price increases in some sectors,” the statement said.
The language on inflation differs slightly from previous data. See how the statement changed this month here.
– Jesse Pound
Markets stabilized after the Fed’s announcement
Equity and fixed income markets showed little initial movement after the release of the Federal Reserve’s policy statement. The S&P 500 was little changed, while the 10-year Treasury rate rose slightly to 1.572%.
– Jesse Pound
Fed announces tapered asset purchase plan
The Federal Reserve revealed its plan to slow its asset purchases later this month. The central bank will cut current purchases by $15 billion per month in November and December, and said it will likely follow a similar path in the coming months. The Fed is currently making purchases of approximately $120 billion per month.
The Fed embarked on asset purchases in March 2020 in an effort to stabilize credit markets during the massive market sell-off sparked by the pandemic. The Fed kept buying steady, inflating its balance sheet to historic levels, even as the economy began to recover and markets stabilized.
– Jesse Pound
Dow down 100 points before Fed announcement
Stock markets were relatively calm but mixed shortly before the Fed’s policy announcement at 2 PM ET.
The Dow Jones Industrial Average was down 140 points, or 0.4%, while the S&P 500 was down a modest 0.1%. The tech-heavy Nasdaq Composite is up slightly.
On the fixed income side, the yield on the 10-year Treasury is up about 2 basis points for the day at 1.565%. However, the record price is still well below last month’s highs. Yield moves inversely to prices, and the basis point is 0.01%.
– Jesse Pound
First rate hike in September, Reader expects from BlackRock
Bond markets appear to be pricing in their first rate hike as soon as June, but a major Wall Street fixed-income investor said the Fed could delay a few more months.
BlackRock’s Rick Reader said Monday that he believes the central bank may make its first rate hike in September.
“I think the market may have gone over how much they’re going to do, but I think they’re going to raise rates once or twice next year,” Reeder said.
Jesse Pound, Patty Doom
The market is looking for next steps after the taper
The Federal Reserve is widely expected to announce its plan to scale back asset purchases on Wednesday, with many market watchers saying the monthly purchases should end completely by mid-2022.
Investors will be contacted for clues about the rest of the Fed’s post-crisis plans, including raising interest rates and changing language on inflation from Fed Chair Jerome Powell. In recent months, expectations for a rate hike next year have risen sharply while inflation has remained elevated.
said Bill English, a former chief adviser to the Federal Reserve and now a professor at Yale University School of Management. “I would like to hear him say there are downside risks. Fiscal policy is tightening too much.”
Jesse Pound, Jeff Cox
