The Fed’s “full-allotment overnight reverse repurchase agreement facility” (FRFA) – a mechanism to control short-term rates (see post) – is no longer just an academic exercise.
Tag Archive for Fed Funds
Contributors- Economic and Financial, Must Read, Taken Down
If QE is heroin, what is the methadone equivalent and how do we avoid side effects? Sober Look
by Sober Look • • 0 Comments
The Federal Reserve remains concerned about exiting the massive bond buying program that has been in place for over a year now. The program has become a bit of a trap (see post), creating a dependence on an unsustainable levels of stimulus. The concern…
Contributors- Economic and Financial, Must Read, Taken Down
Market’s overnight rate expectations are more dovish than the Fed’s own forecasts- Sober Look
by Sober Look • • 0 Comments
Market expectations of the first rate hike have once again been pushed out to May of 2015.
The combination of the Fed maintaining its unprecedented monetary easing program at the September meeting as well as the assumption that Janet Yellen will be taking over for Bernanke would suggest that the central bank is farther from any rate adjustment than was expected earlier this year. In fact the market now considers the Fed to be more dovish than the Fed’s own rate forecasts would suggest.
Barclays Research: – Despite stronger than expected data, the market has pushed out hike expectations. … the market is now pricing in the Fed to hike to 0.75% by the end of 2015 vs the Fed’s [own] forecast of 1% and 1.8% by the end of 2016 vs Fed’s forecast of 2%.
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Contributors- Economic and Financial, Must Read, Taken Down
Implied rate hike date moves to October of 2014 – Sober Look
by Sober Look • • 0 Comments
The Fed Funds futures curve steepened again on Friday, bringing forward the implied date of the first rate hike by the Fed.Fed Funds futures curve shift as a result of Friday’s employment report The date is now closer to October of 2014 as opposed…
Contributors- Economic and Financial, Must Read, Taken Down
The Fed to face some challenges as it ultimately exits the unprecedented monetary expansion – Sober Look
by Walter Kurtz • • 0 Comments
This is a syndicated repost courtesy of Sober Look. To view original, click here. Reposted with permission. The recently released minutes of the last FOMC meeting made some economists and market participants begin contemplating the Fed’s exit, its timing, and the implications. This is because the FOMC’s discussion sounded a bit more hawkish than many…
Bears Chat, Best of the Forums
In an Undercollateralized World
by Bears Chat at The Wall Street Examiner • • 0 Comments
The world is undercollateralized. This is the single most important feature of the 2011 economy. Sixty years ago, if assets were worth less than loans, it was possible to work our way into the black. In 1950, 59% of US corporate profits were from m…
Liquidity Trader
Much Ado About Reserve Growth
by Lee Adler • • 0 Comments
Critics of the Fed have expressed concern about the inflationary implications of the huge expansion of the Fed’s balance sheet, particularly excess reserves. The reserve bulge was created when the Fed expanded the alphabet soup programs in 2008. At the same time the Fed began paying interest on reserves, paying 1%, which was .75% above…
Liquidity Trader, Professional Edition
Fed Report Update – Professional Edition
by Lee Adler • • 0 Comments
The market sailed through 3 Treasury auctions unscathed today. 4 week bills, 52 week bills, and 3 year notes all went off without a hitch, raising $40 billion in new cash. The market had no trouble absorbing the new supply, thanks to continued panic levels of buying and support from Ben and Co. Bid/cover ratios…
Liquidity Trader, Professional Edition
Fed’s Intended Consequences – Professional Edition
by Lee Adler • • 0 Comments
The Fed ratified the market’s judgment on rates today, as it always does. The Fed does not set rates. It simply follows the market. This comes as no surprise to readers of this report. Fed Funds have traded below 0.25% since December 4. Since the Fed does not want to appear irrelevant, it acts as…
