Christopher Whalen

Self-Fulfilling Yield Curves

New York – Happy summer. Much has changed in the markets since the last meeting of the Federal Open Market Committee several weeks ago. The target for short-term rates was cut a quarter point and, more important, the runoff of the Fed’s balance sheet ended, removing the tightening bias to US monetary policy. We had called loudly for the latter and discounted the former, most notably in a discussion on CNBC, so we view the FOMC action as the least that could be done given the political noise

Maybe No Rate Cut in July?

Avalon | We caused a bit of a fuss last week on CNBC by suggesting that the Federal Open Market Committee will not cut the target for Fed funds this month. We suggested instead that the Federal Reserve Board will first end the runoff of the System Open Market Account (SOMA) and then “wait and see” about any change in the rate target. Readers of The Institutional Risk Analyst know that we tend not to follow the crowd, especially when the data suggests that the narrative is at odds with actual