• Fed tweaks interest on excess reserves and reverse repo rates Link
    Real Time Economics Wed 18 Sep 2019 18:46

    WASHINGTON—The Federal Reserve, faced with persistent upward pressure in short-term interest-rate markets, made a fourth technical adjustment Wednesday to a key rate it uses to influence the economy.

    The Fed lowered the interest on excess reserves rate, or IOER, more than it decreased its federal-funds target rate range. The change occurred at a meeting where officials lowered the fed-funds range for a second time this year, moving it down by a quarter percentage point to between 1.75% and 2%.

    ...
  • Central bankers were divided over Wednesday’s decision to cut interest rates and the outlook for further reductions. Link
    Real Time Economics Wed 18 Sep 2019 18:11

    [For up-to-the-minute of the Fed’s monetary policy meeting, please see Federal Reserve Interest-Rate Decision—Live Analysis]

    WASHINGTON—The Federal Reserve voted to cut interest rates by a quarter-percentage point for the second time in as many months to cushion the economy against a global slowdown amplified by the U.S.-China trade war.

  • Parsing the Fed: How the September statement changed from July Link
    Real Time Economics Wed 18 Sep 2019 18:11

    The Federal Reserve releases a statement at the conclusion of each of its policy-setting meetings, outlining the central bank’s economic outlook and the actions it plans to take. Much of the statement remains the same from meeting to meeting. Fed watchers closely parse changes between statements to see how the Fed’s views are evolving. This […]

  • The Federal Reserve voted to cut interest rates by a quarter-percentage point for the second time in as many months to cushion the economy against a global slowdown Link
    Real Time Economics Wed 18 Sep 2019 18:11

    The Federal Reserve cut its short-term benchmark interest rate today by a quarter point at the conclusion of its two-day meeting. What clues will the central bank offer about any more rate reductions? Our central banking, economics and markets teams bring you live news and analysis through the afternoon.

  • RT @JMitchellWSJ: What caused the student debt boom? Hint: It had nothing to do with the 2010 move to direct government lending, which mere…
    Real Time Economics Wed 18 Sep 2019 17:56
  • WSJ FED PREVIEW: The Fed is likely to cut its short-term benchmark rate by one quarter point to a range between 1.75% and 2% at the conclusion of its meeting today. The big question: Will we get clues about any more rate reductions? Link by @NickTimiraos
    Real Time Economics Wed 18 Sep 2019 17:11

    The Federal Reserve is likely to cut its short-term benchmark rate by one quarter percentage point to a range between 1.75% and 2% at the conclusion of its two-day meeting on Wednesday. The big question is what kind of clues the central bank offers about any more rate reductions.

    Hints could be provided in the Fed’s new policy statement and economic projections, to be released at 2 p.m. EDT, and at Chairman Jerome Powell’s press conference at 2:30 p.m. Here’s what to watch:

    ...
  • The Fed injected funds into money markets for first time since 2008. Here's why. Link
    Real Time Economics Wed 18 Sep 2019 16:45

    For the first time in more than a decade, the Federal Reserve injected cash into money markets Tuesday to pull down interest rates and said it would do so again Wednesday after technical factors led to a sudden shortfall of cash.

    The pressures relate to shortages of funds banks face resulting from an increase in federal borrowing and the central bank’s decision to shrink the size of its securities holdings in recent years. It reduced these holdings by not buying new ones when they matured, effectively taking money out of the...

  • Strength in the multifamily-home sector helped drive a steep climb in building in August. Link
    Real Time Economics Wed 18 Sep 2019 16:35

    Home building in the U.S. increased in August to the highest level since June 2007, according to Commerce Department data released Wednesday.

    The report cues a positive note for the American housing industry in what has been a year marked by lagging home sales and sluggish single-family construction.

  • The Federal Reserve is likely to cut its short-term benchmark interest rate today. Follow our live news and analysis Link
    Real Time Economics Wed 18 Sep 2019 16:10

    The Federal Reserve is likely to cut its short-term benchmark interest rate today at the conclusion of its two-day meeting. What clues will the central bank offer about any more rate reductions? Our central banking, economics and markets teams will bring you live news and analysis through the afternoon.

  • Joe Biden wants a “reordering” of capitalism that “doesn’t require some fundamental shift.” Can he have it both ways? Link
    Real Time Economics Wed 18 Sep 2019 15:25

    Joe Biden addressed the Poor People’s Moral Action Congress in Washington in mid-June, decrying the country’s “gigantic income inequality.” The next day, he held a fundraiser at New York’s Carlyle Hotel, assuring the Wall Street audience he wouldn’t demonize the affluent.

    “Nobody has to be punished,” the former vice president said. “No one’s standard of living will change.”

    Some...

  • Trump said on Twitter that he has ordered Treasury Secretary Steven Mnuchin to ‘substantially increase’ sanctions on Iran Link
    Real Time Economics Wed 18 Sep 2019 14:25

    WASHINGTON—President Trump said on Twitter Wednesday that he has ordered Treasury Secretary Steven Mnuchin to “substantially increase” sanctions on Iran in the wake of attacks on Saudi Arabian oil facilities.

    “I have just instructed the Secretary of the Treasury to substantially increase Sanctions on the country of Iran!” he said.

  • Trump said China has started to buy U.S. agricultural products, and signaled optimism he will sign a trade deal with China before the 2020 election. Link
    Real Time Economics Wed 18 Sep 2019 13:45

    WASHINGTON—President Trump said China has started to buy U.S. agricultural products, and signaled optimism that his administration will be able to sign a trade deal with China before the 2020 presidential election.

    Speaking to reporters on Air Force One en route to Mountain View, Calif., Mr. Trump said on Tuesday that a deal with China will “be the greatest deal ever made,” adding, “and China knows that.”

    Chinese...

  • Cheaper borrowing costs have prompted a wave of refinancing activity that may help consumer spending, but otherwise have had little impact on U.S. households Link
    Real Time Economics Wed 18 Sep 2019 13:15

    WASHINGTON—Consumers’ borrowing costs have drifted lower since the Federal Reserve cut interest rates in July, fueling a wave of mortgage refinancing and helping to support household spending despite deepening economic uncertainty.

    Mortgage rates in the U.S. touched a nearly three-year low in recent weeks. The average rate on a 30-year, fixed-rate mortgage for a typical borrower wielding excellent credit and a 20% down payment fell to 3.56% last week from 3.75% in the week before the Fed’s July 30-31 policy meeting, according...

  • With supply disrupted and labor markets tight, don’t give inflation up for dead Link via @greg_ip
    Real Time Economics Wed 18 Sep 2019 12:40

    Some are idiosyncratic and acute, like the grounding of Boeing Co. ’s 737 MAX airliner—which is nudging up airfares—or an outbreak of African swine fever that has sent Chinese pork prices soaring. Others are more systemic and slower moving: A retreat from globalization is raising trade barriers; resistance to immigration could aggravate labor shortages in aging countries such as the U.S.; and geopolitical threats hang over the oil market.

    By restricting the supply of a vital product or input, such shocks can undermine economic growth, push up inflation, or both.

    Right now, investors and economists see these supply shocks as a threat to growth, but not inflation. That’s understandable: Recession risks have been uncomfortably high and inflation has been too low for the Federal Reserve’s comfort.

    Nonetheless, after a puzzling slide in the spring, inflation excluding food and energy in the past few months has bounced back to around 2%. The U.S. shows no sign...

  • With supply disrupted and labor markets tight, don’t give inflation up for dead Link
    Real Time Economics Wed 18 Sep 2019 12:20

    In recent days, the U.S. suffered two supply shocks: an attack on Saudi oil production sent crude prices sharply higher and the United Auto Workers walked off the job at General Motors Co., the union’s first strike in 12 years.

    Neither event would be worrisome in isolation. But they aren’t isolated. They are the latest in a series of supply shocks for the American and global economies.

    Some...

  • Markets will seek clues on outlook for further reductions in new projections and at Fed Chairman Jerome Powell’s press conference Link
    Real Time Economics Wed 18 Sep 2019 11:55

    The Federal Reserve is likely to cut its short-term benchmark rate by one quarter percentage point to a range between 1.75% and 2% at the conclusion of its two-day meeting on Wednesday. The big question is what kind of clues the central bank offers about any more rate reductions.

    Hints could be provided in the Fed’s new policy statement and economic projections, to be released at 2 p.m. EDT, and at Chairman Jerome Powell’s press conference at 2:30 p.m. Here’s what to watch:

    ...
  • Newsletter: Fed Jumps Into Markets, Saudis Restore Some Production, the Army is Looking for a Few More Good Men Link
    Real Time Economics Wed 18 Sep 2019 11:55

    The Fed has a lot of things to talk about ahead of its interest-rate decision later today. How resilient is the U.S. economy? How severe are the slowdowns in China and Europe? What's going on with trade policy and oil prices? What's up with repo markets?  ¯\_(?)_/¯

    Repo Man

    For the first time in more than a decade, the Federal Reserve injected cash into money markets to pull down interest rates. The move came ahead of the Fed’s interest-rate decision expected later today. 

  • RT @theofrancis: Always Low Prices: Walmart likely discriminated against 178 female workers by paying less or denying promotions because of…
    Real Time Economics Wed 18 Sep 2019 01:10
  • Mexican central banker Jonathan Heath sees room for more rate cuts Link
    Real Time Economics Wed 18 Sep 2019 00:10

    MEXICO CITY—The Bank of Mexico has room to make more interest-rate cuts in coming months if the current downward inflation trend consolidates and the U.S. Federal Reserve remains in easing mode, said deputy governor Jonathan Heath.

    Mexico’s central bank last month cut the overnight interest-rate target by a quarter percentage point to 8%—the first rate cut in five years after a long tightening cycle. The reduction came as Mexico’s economy stagnates amid global recession fears and inflation is falling toward to the central...

  • U.S. household sentiment dropped in August to the lowest level since January, as monetary and trade policies heightened uncertainty for consumers. Link
    Real Time Economics Tue 17 Sep 2019 23:10

    WASHINGTON—U.S. household sentiment dropped to a seven-month low in August, as consumers took fright from the implications of trade uncertainties and the Federal Reserve’s recent rate cut.

    The University of Michigan said Friday its preliminary index of consumer sentiment for August was 92.1, down from July’s reading of 98.4.

    That fell short...

  • RT @NHendersonWSJ: Traders are scrambling to figure out what caused an unexpected rate spike in a vital but murky part of the financial sys…
    Real Time Economics Tue 17 Sep 2019 22:10
  • Fed steps into repo market to control soaring rates Link
    Real Time Economics Tue 17 Sep 2019 21:10

    BREAKING NEWS....

    The New York Fed says it will inject up to $75 billion at 8:15 a.m. ET on Wednesday.

    (Article below will update.)

    For the first time...

  • RT @NickTimiraos: The New York Fed said it will conduct another repo market transaction on Wednesday to stabilize money markets https://t.c…
    Real Time Economics Tue 17 Sep 2019 20:39
  • Trump said China has started to buy U.S. agricultural products, and signaled optimism he will sign a trade deal with China before the 2020 election. Link
    Real Time Economics Tue 17 Sep 2019 20:29

    WASHINGTON—President Trump said China has started to buy U.S. agricultural products, and signaled optimism that his administration will be able to sign a trade deal with China before the 2020 presidential election.

    Speaking to reporters on Air Force One en route to Mountain View, Calif., Mr. Trump said on Tuesday that a deal with China will “be the greatest deal ever made,” adding, “and China knows that.”

    Chinese...

  • Traders are scrambling to figure out what caused an unexpected rate spike in a vital but murky part of the financial system—the repo market Link
    Real Time Economics Tue 17 Sep 2019 19:59

    Traders are scrambling to discern what caused an unexpected rate spike in a vital but murky part of the financial system—the market for repurchase agreements, known as repo.

    What is the repo market? A repo is when one party lends out cash in exchange for a roughly equivalent value of securities, often Treasury notes. This market exists to allow companies that own lots of securities but are short on cash to cheaply borrow money. And it allows parties with lots of cash to earn a small return while taking little risk, because...

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