US Treasury yields tick higher ahead of comments from Fed’s Powell

Trump warns Iran not to fight the US: ‘That will be the official…Trump’s threat, posted on Twitter, comes amid rising international tensions in the Middle East as the U.S. has dispatched a carrier strike group and bomber task force to the… Politicsread more


Trump warns Iran not to fight the US: ‘That will be the official…Trump’s threat, posted on Twitter, comes amid rising international tensions in the Middle East as the U.S. has dispatched a carrier strike group and bomber task force to the… Politicsread more
US Treasury yields tick higher ahead of comments from Fed’s Powell Cached Page below :
Company: cnbc, Activity: cnbc, Date: 2019-05-20  Authors: sam meredith
Keywords: news, cnbc, companies, twitter, higher, comments, rising, tensions, posted, strike, thepoliticsread, tick, warns, yields, ahead, trump, powell, task, threat, treasury, feds


US Treasury yields tick higher ahead of comments from Fed's Powell

Trump warns Iran not to fight the US: ‘That will be the official…

Trump’s threat, posted on Twitter, comes amid rising international tensions in the Middle East as the U.S. has dispatched a carrier strike group and bomber task force to the…

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Company: cnbc, Activity: cnbc, Date: 2019-05-20  Authors: sam meredith
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US futures signal a muted open after Powell comments send stocks lower

The S&P just did something it hasn’t done in three decadesThe S&P 500 has had its best start to the year in 32 years, but market watchers Katie Stockton and Gina Sanchez say proceed with caution. Trading Nationread more


The S&P just did something it hasn’t done in three decadesThe S&P 500 has had its best start to the year in 32 years, but market watchers Katie Stockton and Gina Sanchez say proceed with caution. Trading Nationread more
US futures signal a muted open after Powell comments send stocks lower Cached Page below :
Company: cnbc, Activity: cnbc, Date: 2019-05-02  Authors: silvia amaro
Keywords: news, cnbc, companies, stockton, stocks, send, sp, katie, muted, futures, market, open, lower, start, say, powell, proceed, nationread, comments, watchers, signal, sanchez


US futures signal a muted open after Powell comments send stocks lower

The S&P just did something it hasn’t done in three decades

The S&P 500 has had its best start to the year in 32 years, but market watchers Katie Stockton and Gina Sanchez say proceed with caution.

Trading Nation

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Company: cnbc, Activity: cnbc, Date: 2019-05-02  Authors: silvia amaro
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Europe lower after comments from Fed’s Powell; factory activity contracts; VW up 5%

The S&P just did something it hasn’t done in three decadesThe S&P 500 has had its best start to the year in 32 years, but market watchers Katie Stockton and Gina Sanchez say proceed with caution. Trading Nationread more


The S&P just did something it hasn’t done in three decadesThe S&P 500 has had its best start to the year in 32 years, but market watchers Katie Stockton and Gina Sanchez say proceed with caution. Trading Nationread more
Europe lower after comments from Fed’s Powell; factory activity contracts; VW up 5% Cached Page below :
Company: cnbc, Activity: cnbc, Date: 2019-05-02  Authors: matt clinch
Keywords: news, cnbc, companies, contracts, feds, sp, vw, europe, market, katie, lower, start, say, activity, powell, proceed, nationread, factory, comments, watchers, stockton, sanchez


Europe lower after comments from Fed's Powell; factory activity contracts; VW up 5%

The S&P just did something it hasn’t done in three decades

The S&P 500 has had its best start to the year in 32 years, but market watchers Katie Stockton and Gina Sanchez say proceed with caution.

Trading Nation

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Company: cnbc, Activity: cnbc, Date: 2019-05-02  Authors: matt clinch
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Cramer: Don’t expect Fed Chair Powell to bow to Trump

But we have an independent central bank in the country, which means Powell can do whatever the heck he wants.” That’s why I think Trump’s tweets are counterproductive.” The central bank on Wednesday revealed that it would leave interest rates at current levels amid low inflation. Trump has argued that the lack of inflation is a good reason to cut rates in order to spur more economic growth. “We don’t live in a banana republic where the central bank is run by some spineless sycophant, and that’s


But we have an independent central bank in the country, which means Powell can do whatever the heck he wants.” That’s why I think Trump’s tweets are counterproductive.” The central bank on Wednesday revealed that it would leave interest rates at current levels amid low inflation. Trump has argued that the lack of inflation is a good reason to cut rates in order to spur more economic growth. “We don’t live in a banana republic where the central bank is run by some spineless sycophant, and that’s
Cramer: Don’t expect Fed Chair Powell to bow to Trump Cached Page below :
Company: cnbc, Activity: cnbc, Date: 2019-05-02  Authors: tyler clifford
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Cramer: Don't expect Fed Chair Powell to bow to Trump

CNBC’s Jim Cramer on Thursday said it’s a “lunatic theory” to think that Federal Reserve Chair Jerome Powell let the market down by not going along with President Donald Trump’s call to cut interest rates.

“That is insane. Look, I am a big believer that the president has every right to complain about Powell’s moves,” the “Mad Money” host said. “I think that many of his criticisms actually [have been] spot on. But we have an independent central bank in the country, which means Powell can do whatever the heck he wants.”

Disappointed, many began selling futures off the news, Cramer said. Even if Powell followed Trump’s orders and moved to ease on monetary policy, now is not the time to reduce the benchmark rate, he said.

It currently stands between 2.25% and 2.5%, the level the Fed raised rates to in December.

“If people started believing Powell could be pressured into doing what the White House wants, he would lose all credibility,” Cramer said. “No one would believe him when he threatened to tighten, because you know he’d back down. That’s why I think Trump’s tweets are counterproductive.”

The federal Labor Department will release its nonfarm payroll report on Friday. Cramer expects the numbers to be strong, but is concerned it will only silence those calling for rate cuts and embolden those that want a rate hike. People that will call for a more hawkish Fed still won’t concede that they got it wrong when Powell last hiked rates in the fourth quarter and said there were more planned for 2019.

“Powell can’t start cutting rates here – no, he can’t. Not with with better numbers than we had when he last tightened in December, which is the case,” the “Mad Money” host said. “He has to wait a bit after the last hike — no matter what. Regardless of what Trump said, a cut was never on the table.”

The central bank on Wednesday revealed that it would leave interest rates at current levels amid low inflation. Trump has argued that the lack of inflation is a good reason to cut rates in order to spur more economic growth.

“We don’t live in a banana republic where the central bank is run by some spineless sycophant, and that’s a good thing,” Cramer said.


Company: cnbc, Activity: cnbc, Date: 2019-05-02  Authors: tyler clifford
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Federal Reserve fends off efforts to be politicized by President Trump, for now

U.S. President Donald Trump speaks as Jerome Powell, governor of the U.S. Federal Reserve and Trumps nominee as chairman of the Federal Reserve, left, listens during a nomination announcement in the Rose Garden of the White House in Washington, D.C., U.S., on Thursday, Nov. 2, 2017. In a town where Trump has succeeded in getting his way with many institutions, influencing policy at the Federal Reserve hasn’t been one of them. “We think nominees to the Federal Reserve board should be picked for t


U.S. President Donald Trump speaks as Jerome Powell, governor of the U.S. Federal Reserve and Trumps nominee as chairman of the Federal Reserve, left, listens during a nomination announcement in the Rose Garden of the White House in Washington, D.C., U.S., on Thursday, Nov. 2, 2017. In a town where Trump has succeeded in getting his way with many institutions, influencing policy at the Federal Reserve hasn’t been one of them. “We think nominees to the Federal Reserve board should be picked for t
Federal Reserve fends off efforts to be politicized by President Trump, for now Cached Page below :
Company: cnbc, Activity: cnbc, Date: 2019-05-02  Authors: patti domm
Keywords: news, cnbc, companies, policy, politicized, federal, president, fed, financial, fends, moore, rate, reserve, trumps, efforts, trump, powell


Federal Reserve fends off efforts to be politicized by President Trump, for now

U.S. President Donald Trump speaks as Jerome Powell, governor of the U.S. Federal Reserve and Trumps nominee as chairman of the Federal Reserve, left, listens during a nomination announcement in the Rose Garden of the White House in Washington, D.C., U.S., on Thursday, Nov. 2, 2017. Andrew Harrer| Bloomberg | Getty Images

Federal Reserve Chairman Jerome Powell has made clear the Fed will not bend to the will of President Donald Trump, and so far the central bank appears to be winning. In a town where Trump has succeeded in getting his way with many institutions, influencing policy at the Federal Reserve hasn’t been one of them. That was evidenced Thursday when Stephen Moore became the second of two controversial potential Trump nominees to remove himself from the process, not a surprise in Washington where it appears he would not receive sufficient support in the Senate. But Trump is likely to try again, since the Fed and Powell have not listened to his calls to lower interest rates or embark on a program of quantitative easing, a policy the Fed initiated during the financial crisis and has since retired.

“Trump views loyalty over anything else and he needs people on the Fed who are loyal to him, and he will look for someone else in the same loyalty mode as Herman Cain and Stephen Moore,” said Tom Block, Washington policy strategist at FundStrat. “As has been pointed out by many, Trump’s earlier choices have been solid economists who have earned their seats. Then he tried to put someone loyal across at the Fed, and he’s having a hard time finding someone.” Moore said he was bowing out because attacks on his character have become untenable for himself and his family. Block said several Republican women senators, including Iowa Sen. Joni Ernst, were unlikely to support him because of controversial remarks he made about women. But the exit of Moore was viewed as a positive by those who believed Trump was trying to politicize the Fed.

‘Picked for their acumen’

“The failure of the two potential nominees to gain traction, I think, suggests there’s a strong bipartisan support for continued independence of the Fed and Fed policy because the fact that senators came back and said this doesn’t seem quite right, gives you an indication that there are places where you can inject politics and places where you would prefer it not to go,” said Barclays chief U.S. economist Michael Gapen. “We think nominees to the Federal Reserve board should be picked for their acumen and monetary policy bona fides, not for their political stripes.” Moore and Herman Cain, a former pizza restaurant executive, who withdrew previously, were criticized for changing their prior hawkish tones to fit with Trump’s demands for easier Fed policy. Cain, a GOP presidential candidate in 2012, had presented a tax plan at the time that advocated a return to the gold standard, and Moore had been his adviser. Both candidates did have some related experience. Moore holds a master of arts in economics from George Mason University. He also served as a fellow at the Cato Institute, the Club for Growth, and the Heritage Foundation and was formerly on The Wall Street Journal editorial board. Cain was a chairman and deputy chairman at both the Omaha branch of the Federal Reserve Bank of Kansas City and the Federal Reserve Bank of Kansas City.

Stephen Moore Anjali Sundaram | CNBC

As the Fed met earlier this week, Trump tweeted criticism of the Federal Reserve’s policy and called for a 1 percentage point rate cut and a return to financial crisis policy, quantitative easing. He blamed the Fed for holding back the economy. Moore has been supportive of rate cuts in recent comments. Powell has publicly said the Fed is not influenced by the White House, and yesterday he made it clear the Fed was not considering interest rate cuts. When he spoke to the media following the Fed’s meeting, he reiterated the Fed was patient and not ready to move in either direction. He also said the Fed does not see low inflation as a persistent problem that would require a policy change. In other words, he signaled there was no rate cut now under consideration by the Fed. “Powell said the Committee isn’t worried about too low inflation which appears to rule out a rate cut for now. This is going to make the Trump administration a little cross as they try to engender faster rocket ship growth that can put the President back in the White House for a second term,” MUFG chief financial economist Chris Rupkey wrote, following Wednesday’s briefing by Powell.

Protecting the reserve currency

If Powell did appear to be influenced by the president, it would be a negative for financial markets. “Because [the dollar] is the reserve currency and will remain the reserve currency, it is imperative that we have a sound monetary structure that the independent Fed has done a good job of maintaining,” said Block. The risk is that even thought the Fed does not respond to Trump’s criticism, his tweets and other attacks could harm the Fed’s credibility. “The perception in financial markets have been warped about what the Fed’s motivation is because of the president’s rhetoric,” said Diane Swonk, chief economist at Grant Thornton. When Powell and the Fed signaled they would pause in the rate hiking cycle following the December hike, it was because of economic signals, not Trump’s calls for easier policy, she said.


Company: cnbc, Activity: cnbc, Date: 2019-05-02  Authors: patti domm
Keywords: news, cnbc, companies, policy, politicized, federal, president, fed, financial, fends, moore, rate, reserve, trumps, efforts, trump, powell


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Here’s the one word from Jerome Powell that has people raising their eyebrows

Jerome Powell, chairman of the U.S. Federal Reserve, speaks during a news conference following a Federal Open Market Committee (FOMC) meeting in Washington, D.C., Sept. 26, 2018. Powell knocked that idea, by explaining that the central bank still sees the weakness as the result of “transitory” factors, such as portfolio management services, lower apparel prices and airfares. It only took one word from Fed Chair Jerome Powell on inflation to send the markets reeling, and that word was “transitory


Jerome Powell, chairman of the U.S. Federal Reserve, speaks during a news conference following a Federal Open Market Committee (FOMC) meeting in Washington, D.C., Sept. 26, 2018. Powell knocked that idea, by explaining that the central bank still sees the weakness as the result of “transitory” factors, such as portfolio management services, lower apparel prices and airfares. It only took one word from Fed Chair Jerome Powell on inflation to send the markets reeling, and that word was “transitory
Here’s the one word from Jerome Powell that has people raising their eyebrows Cached Page below :
Company: cnbc, Activity: cnbc, Date: 2019-05-01  Authors: patti domm
Keywords: news, cnbc, companies, transitory, heres, eyebrows, jerome, inflation, market, rates, raising, powell, word, factors, feds, federal, fed


Here's the one word from Jerome Powell that has people raising their eyebrows

Jerome Powell, chairman of the U.S. Federal Reserve, speaks during a news conference following a Federal Open Market Committee (FOMC) meeting in Washington, D.C., Sept. 26, 2018.

The Fed’s target on inflation is 2%, and the core PCE rate watched by the Fed fell to a surprising 1.6% in the first quarter.

Traders have been speculating that recent weaker inflation readings would concern the Federal Reserve so much that it would cut interest rates later this year. Powell knocked that idea, by explaining that the central bank still sees the weakness as the result of “transitory” factors, such as portfolio management services, lower apparel prices and airfares.

It only took one word from Fed Chair Jerome Powell on inflation to send the markets reeling, and that word was “transitory.”

“We suspect transitory factors may be at work,” Powell said, adding inflation should return to the Fed’s target over time, and then be symmetric around its objective. Powell was commenting at a news briefing, following the Fed’s two-day meeting.

“If we did see inflation running persistently below, that is something the committee would be concerned about and something we would take into account when setting policy,” he said.

Powell said the Fed believes a number of issues were holding back inflation but it’s likely they are transitory like the change in cellphone rates that impacted inflation several years ago. “We’re going to be watching these things carefully to see if that’s the case,” he said.

Treasury yields fell, the dollar strengthened and stocks sold off after Powell’s comment, and also after he described some of the risk factors impacting the economy as moderating.

“Transitory was word of the day,” said Michael Schumacher, director rates at Wells Fargo. “If you look at pricing for fed funds futures for the end of 2019, it moved by about nine basis points. The market is looking a lot more reasonable.”

Before the Fed briefing, the fed funds futures were pricing 25 basis points of easing by December.

Schumacher said the market also reacted to the fact that Powell stressed that the Fed is not moving in either direction at this point, though it sees improvement in the global economy and less threat from risk factors, like trade and Brexit.

“They’re in the middle at this point, not sitting on either end of the teeter totter, which is what they had been telling people, but the market didn’t really believe it,” he said.


Company: cnbc, Activity: cnbc, Date: 2019-05-01  Authors: patti domm
Keywords: news, cnbc, companies, transitory, heres, eyebrows, jerome, inflation, market, rates, raising, powell, word, factors, feds, federal, fed


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Powell says Fed doesn’t see strong case for rate cut or hike

We don’t see a strong case for moving in either direction,” Powell said during a news conference after the central bank’s policy meeting this week. Before the chairman’s comments, traders on the fed funds futures market had been pricing in about a 67% chance of a rate cut by the end of the year. That probability had been reduced to about 55%, according to the CME’s tracker of trading in the Fed’s benchmark rate. The president has cited low inflation as a key reason for the Fed to cut. Other meas


We don’t see a strong case for moving in either direction,” Powell said during a news conference after the central bank’s policy meeting this week. Before the chairman’s comments, traders on the fed funds futures market had been pricing in about a 67% chance of a rate cut by the end of the year. That probability had been reduced to about 55%, according to the CME’s tracker of trading in the Fed’s benchmark rate. The president has cited low inflation as a key reason for the Fed to cut. Other meas
Powell says Fed doesn’t see strong case for rate cut or hike Cached Page below :
Company: cnbc, Activity: cnbc, Date: 2019-05-01  Authors: jeff cox
Keywords: news, cnbc, companies, rate, strong, case, showed, market, doesnt, inflation, rates, policy, powell, hike, cut, feds, federal, fed


Powell says Fed doesn't see strong case for rate cut or hike

The Federal Reserve feels comfortable with current policy and is likely to keep interest rates steady for an extended period of time, Chairman Jerome Powell said Wednesday.

Powell’s comments coincided with a sharp stock market sell-off attributed to worries that the Fed would not be cutting rates anytime soon, contrary to market pricing.

“We do think our policy stance is appropriate right now. We don’t see a strong case for moving in either direction,” Powell said during a news conference after the central bank’s policy meeting this week.

Before the chairman’s comments, traders on the fed funds futures market had been pricing in about a 67% chance of a rate cut by the end of the year. That probability had been reduced to about 55%, according to the CME’s tracker of trading in the Fed’s benchmark rate.

In a move that met market expectations, the Federal Open Market Committee unanimously voted to keep the benchmark rate in a range between 2.25% and 2.5%.

President Donald Trump has exerted an unusual level of public pressure to get the Fed to lower rates, suggesting Tuesday that a 1 percentage point cut would be in order.

Without addressing Trump’s criticisms directly, Powell said that absent a significant change in conditions, the current policy will prevail.

The president has cited low inflation as a key reason for the Fed to cut. Powell, though, said that he expects inflation to run close to the central bank’s 2% goal.

“If we did see inflation running persistently below [the goal], that is something the committee would be concerned about, something we would take into account when setting policy,” Powell said in response to a question from CNBC’s Steve Liesman.

The Fed’s favored inflation gauge showed a 12-month gain of 1.6% in March. Powell acknowledged that the reading was below what he had expected, but he called the pressures that drove inflation lower “transient” and likely to revert as the reading gets closer to the Fed’s goal. Among the transitory factors he cited were a decline in financial services fees after the stock market’s fourth-quarter slide, as well as health-care costs.

Other measures besides the personal consumption expenditures index have showed inflation around 2%. The Dallas Fed’s trimmed mean PCE indicator as well as the core consumer price index both showed a 2% gain in March.

As the market digested Powell’s comments, stocks took a sharp turn downward and the Dow Jones Industrial Average finished the day off 163 points.

Chris Gaffney, president of world markets at TIAA Bank, said some of the issue was that traders misinterpreted a technical adjustment the Fed made to the interest it pays on excess bank reserves.

The Federal Open Market Committee reduced the rate by 5 basis points to 2.35%, a move the market initially interpreted as a dovish tilt for the policymaking group. However, Powell explained at his post-meeting news conference that the move was done simply to keep the benchmark fed funds rate within its target range of 2.25% to 2.5% and did not represent a policy shift.


Company: cnbc, Activity: cnbc, Date: 2019-05-01  Authors: jeff cox
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US Treasury yields rebound after Fed says inflation decline is ‘transient’

U.S. government debt yields rebounded on Wednesday after Federal Reserve Chairman Jerome Powell said that the central bank sees a decline in inflation as merely temporary and not yet a worrisome sign for the economy. The yield on the benchmark 10-year Treasury note trimmed losses to around the flatline at 2.514%, while the yield on the 30-year Treasury bond dipped to 2.919%. The central bank held its benchmark rate in a target between 2.25% and 2.5%, matching investor expectations. The Fed, howe


U.S. government debt yields rebounded on Wednesday after Federal Reserve Chairman Jerome Powell said that the central bank sees a decline in inflation as merely temporary and not yet a worrisome sign for the economy. The yield on the benchmark 10-year Treasury note trimmed losses to around the flatline at 2.514%, while the yield on the 30-year Treasury bond dipped to 2.919%. The central bank held its benchmark rate in a target between 2.25% and 2.5%, matching investor expectations. The Fed, howe
US Treasury yields rebound after Fed says inflation decline is ‘transient’ Cached Page below :
Company: cnbc, Activity: cnbc, Date: 2019-05-01  Authors: thomas franck fred imbert, thomas franck, fred imbert
Keywords: news, cnbc, companies, decline, treasury, statement, rebound, inflation, yield, price, yields, central, powell, bank, think, fed, transient


US Treasury yields rebound after Fed says inflation decline is 'transient'

U.S. government debt yields rebounded on Wednesday after Federal Reserve Chairman Jerome Powell said that the central bank sees a decline in inflation as merely temporary and not yet a worrisome sign for the economy.

The yield on the benchmark 10-year Treasury note trimmed losses to around the flatline at 2.514%, while the yield on the 30-year Treasury bond dipped to 2.919%. The 2-year Treasury note yield, which moves inversely with price, reversed an initial 6-basis-point drop and was last seen 4 basis points higher at 2.312%.

The central bank held its benchmark rate in a target between 2.25% and 2.5%, matching investor expectations. The Fed, however, did adjust its language about inflation, noting a more anemic rise in prices during the first few months of 2019.

However, in a press conference following the Fed’s statement, Powell added that while the Fed did observe the inflation downtick, he and others at the central bank believe that the lethargic price action is just temporary.

“We think our policy stance is appropriate at the moment and we don’t see a strong case for moving in either direction,” Powell told CNBC’s Steve Liesman. “We say in our statement of longer-run goals and monetary policy strategy that the Committee would be concerned if inflation were running persistently above or below 2%.”

“And in this case, as we look at these readings in the first quarter for core, we do see good reasons to think that some were or all of the unexpected decrease may wind up being transient,” he added.

Inflation, a critical topic for the Fed, threatens the value of government bonds by eroding the purchasing power of their fixed payments and is often cited by the central bank when it raises borrowing costs to try to cool down the economy. The central bank uses rates to try to balance maximum U.S. employment with stable price growth.

Fed officials have historically viewed 2% inflation as a level consistent with that of a healthy economy. Some Fed officials have grown more cautious as so-called core inflation, which excludes volatile food and energy categories, as struggled to hold at the central bank’s target.

That could leave the Fed without much room to cut rates should it ever want to combat a downturn in the economy with cheaper lending.

Still, the Fed’s statement didn’t mark a significant change from their prior commentary and provided little evidence for those thinking the central bank could cut its overnight rate later this year, J.P. Morgan Chief U.S. Economist Mike Feroli told CNBC.

Wednesday’s statement “isn’t trying to send a message. I think it’s trying to convey how they’re reading things. Which is: Growth is better, inflation is softer – all of that we knew before,” Feroli said. “If you thought they were kind of teeing up for a cut I would have thought you’d change something more than they did. They didn’t change anything on inflation expectations.”


Company: cnbc, Activity: cnbc, Date: 2019-05-01  Authors: thomas franck fred imbert, thomas franck, fred imbert
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Powell will try not to draw ire of Trump or rock markets after Fed meeting Wednesday

The Fed is not expected to announce any change in interest rate policy, when it issues its statement at 2 p.m. If it were hawkish, the Fed would be leaning toward raising interest rates, and if it were dovish, it would be leaning toward easing policy and cutting interest rates. He also said the Fed should cut rates by a percentage point and use quantitative easing, a financial crisis policy tool. If they don’t mean they’re going to cut rates because of it, why harp on it? The Fed may also make a


The Fed is not expected to announce any change in interest rate policy, when it issues its statement at 2 p.m. If it were hawkish, the Fed would be leaning toward raising interest rates, and if it were dovish, it would be leaning toward easing policy and cutting interest rates. He also said the Fed should cut rates by a percentage point and use quantitative easing, a financial crisis policy tool. If they don’t mean they’re going to cut rates because of it, why harp on it? The Fed may also make a
Powell will try not to draw ire of Trump or rock markets after Fed meeting Wednesday Cached Page below :
Company: cnbc, Activity: cnbc, Date: 2019-04-30  Authors: patti domm
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Powell will try not to draw ire of Trump or rock markets after Fed meeting Wednesday

Jerome Powell, chairman of the U.S. Federal Reserve, speaks during a news conference following a Federal Open Market Committee (FOMC) meeting in Washington, D.C., U.S., on Wednesday, March 20, 2019.

Fed Chairman Jerome Powell has a tough job ahead of him, as he will have to avoid ruffling both markets and the White House during his briefing Wednesday.

Fed watchers say the chairman will have to walk a fine line, so as not tilt too hawkish, which could unnerve markets and draw the ire of President Donald Trump. Trump launched a new Twitter attack on the Fed as it met on Tuesday, calling for a 1 percentage point rate hike and a return to quantitative easing.

The Fed chair will also want to avoid sounding too dovish, due to the strength of the economy and the fact financial conditions have improved considerably in the last several months. The Fed is not expected to announce any change in interest rate policy, when it issues its statement at 2 p.m. ET, though it may mention that the economy has improved and inflation has weakened.

“If [Powell] does his job, it’s going to be a nonevent,” said Joseph LaVorgna, Natixis chief economist for the Americas.

“The reason they won’t be too dovish is because the equity market is at a record high. However, the strength in the dollar combined with weak inflation is not going to make them hawkish either,” he said.

Fed policy is currently somewhere in the middle, since the Fed has paused its rate hiking and is watching the economic data before it makes any further moves. If it were hawkish, the Fed would be leaning toward raising interest rates, and if it were dovish, it would be leaning toward easing policy and cutting interest rates.

“The Fed needs to stay firmly on the sidelines without spooking financial markets. They can’t come to a consensus soon enough on what they are going to do if inflation doesn’t pick up in the months to come. They are walking a tight rope between wanting a warmer economy and being justifiably concerned about how low rates are stoking bubbles,” notes Grant Thornton chief economist Diane Swonk.

She expects that Powell’s comments will be well prepared and to the point. “Shorter is better. [He] needs to stay out of the target range of the administration. He will not answer questions [about the] Fed nominee,” Swonk added. Currently, Stephen Moore is a Trump nominee for the Fed, after Herman Cain withdrew.

Trump ramped up his criticism of the Fed Tuesday when he fired off a tweet that said how great China’s stimulus program has been, compared to the U.S. He also said the Fed should cut rates by a percentage point and use quantitative easing, a financial crisis policy tool.

“To call for a 1% cut and resumption of QE, those moves by the Fed would be consistent with a massive financial crisis rather than the current economic state,” said Jon Hill, U.S. rate strategist at BMO. “It just seems like political posturing ahead of the decision where it’s a foregone conclusion that the Fed’s not cutting or raising rates tomorrow.”

Hill said the Fed officials will be careful not to sound too dovish because of both the record-high stock market and the desire to stress their independence and not seem like they can be influenced by Trump’s demand for easier policy.

Yet, behind closed doors, the Fed is likely to be discussing a very dovish move, or the idea of using interest rate cuts as a type of insurance against an economic downturn. But it is not likely to mention the idea in its statement and Powell will not endorse it if questioned about it.

“There has been chatter from Fed members [Chicago Fed President] Charlie Evans and [Vice Chairman] Rich Clarida and some writers that the Fed should consider ‘insurance’ rate cuts ala 1995 and 1998 as lower inflation gives them cover,” notes Peter Boockvar, chief investment officer at Bleakley Advisory Group.

Fed watchers say the Fed is not going to signal any change in policy yet, but may want to have the option of moving interest rates in either direction.

“I think they want to sound even-keeled. The problem they run into is if they keep harping on low inflation it’s going to sound really dovish. This is where it comes back to bite them if that’s not really what they mean. If they don’t mean they’re going to cut rates because of it, why harp on it? He’s going to have to balance what he says,” said Boockvar.

A big topic of interest Wednesday will be how the Fed addresses low inflation, with PCE inflation reported at about 1.5% in March. PCE is the inflation measure watched by the Fed, though CPI inflation has been running higher.

The Fed plans to review how it considers inflation, currently targeted at 2%, so any comments on inflation could be potentially market moving.

The Fed may also make a technical cut to the interest rate on excess reserves, reducing it by about 5 basis points to bring down the fed funds rate.

Citigroup currency strategists said the Fed could make the ‘technical adjustment,’ given that the effective fed funds rate has been moving towards the upper end of the Fed’s target range.

“The upward drift may well be temporary and related to tax payments and the Fed could easily wait to cut later (including outside of FOMC meetings). We have little visibility on the likelihood of a cut to IOER, but in recent history, the Powell Fed has decided to make a change when there was no strong reason to wait, so our weak base case is that the IOER cut takes place at this meeting. Even though this is meant to be a technical adjustment, the Fed will be aware that such a cut in the present environment would have some symbolic significance,” the strategists wrote.

The Fed may also release some more information on its balance sheet and the type of securities it intends to hold, when it ends its wind down program.

Boockvar said Trump should be careful what he wishes for when it comes to Fed policy.

“What Trump is tweeting about…if excessively low rates, even below zero rates, and a lot of QE was this magical elixir, then the Japanese and European economies would be booming right now instead of barely growing,” said Boockvar.


Company: cnbc, Activity: cnbc, Date: 2019-04-30  Authors: patti domm
Keywords: news, cnbc, companies, interest, rock, going, dovish, draw, trump, powell, ire, fed, rate, markets, try, meeting, rates, cut, inflation


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As Trump pressures Powell, Wall Street gives the Fed a passing grade

A separate New York Fed survey of market participants that includes large investors showed that 57 percent gave the top two effectiveness scores while a quarter gave the lowest two scores. But if markets find the Fed’s message confusing or not credible, they may surge or slump in ways that undermines the Fed’s impact. The emphasis on communications is also evident in Powell’s decision this year to hold news conferences after every Fed meeting, double the previous frequency. The New York Fed did


A separate New York Fed survey of market participants that includes large investors showed that 57 percent gave the top two effectiveness scores while a quarter gave the lowest two scores. But if markets find the Fed’s message confusing or not credible, they may surge or slump in ways that undermines the Fed’s impact. The emphasis on communications is also evident in Powell’s decision this year to hold news conferences after every Fed meeting, double the previous frequency. The New York Fed did
As Trump pressures Powell, Wall Street gives the Fed a passing grade Cached Page below :
Company: cnbc, Activity: cnbc, Date: 2019-04-15  Authors: brendan smialowski, afp, getty images
Keywords: news, cnbc, companies, grade, powell, pressures, wall, message, meeting, policymakers, rates, street, fed, passing, gives, markets, feds, york, trump, rate


As Trump pressures Powell, Wall Street gives the Fed a passing grade

A separate New York Fed survey of market participants that includes large investors showed that 57 percent gave the top two effectiveness scores while a quarter gave the lowest two scores. Both surveys were conducted March 6 to 11.

The grades are important because they help the Fed gauge how well its message is getting through to financial markets. The Fed relies on its credibility with investors to influence the economy.

After raising rates four times in 2018, a majority of Fed policymakers at their latest meeting in March expected that they would leave rates in their current 2.25-2.50% range for the rest of the year due to uncertainty about how much the global economy is slowing.

A well-honed message that rates are likely to stay on hold for a while can help ease financial conditions when central banks think those conditions overly tight. But if markets find the Fed’s message confusing or not credible, they may surge or slump in ways that undermines the Fed’s impact. That was the case late last year, when markets swung sharply in response to statements by Powell widely regarded by investors as communication missteps.

President Trump, meanwhile, has publicly slammed the central bank’s prior rate hikes for thwarting economic growth and he also pressed policymakers to change course.

Lewis Alexander, the chief economist at Nomura Securities, said the Fed moved policy “quite a lot” from December to March and that calibrating their language so everyone could understand it was not going to be easy.

“Powell’s stated intention to use plain language I very much endorse; there’s nothing in this world that can’t be explained thoroughly but simply,” he said.

The Fed is increasingly keen on its ability to communicate. Powell has instructed a small group of policymakers to come up with ways to improve it, minutes of the Fed’s March meeting published on Wednesday showed. This reflects concern that markets may take Fed forecasts on rates and the economy as promises rather than best-guess projections.

The emphasis on communications is also evident in Powell’s decision this year to hold news conferences after every Fed meeting, double the previous frequency. Even the New York Fed’s inclusion of the question on communications effectiveness in the March survey may reflect increased interest, given that historically it has posed that question only once a quarter.

Grades generally go up when the Fed does as expected and fall when it surprises, the Reuters analysis of grades over the last nine years show. The New York Fed did not make its pre-2011 surveys available.

Powell and other Fed policymakers have tried to dispel any perception that it could derail the economy by being too aggressive. Stocks leapt higher after Powell signaled he would be open to taking a go-slow approach on rate hikes.

In October 2015, when the Yellen Fed was navigating the difficult transition from years of super-low interest rates to a cycle of rate hikes, she got the worst grade of her tenure — an average 2.27 out of 5.

The Bernanke Fed did worse, getting a grade of 2.1 in late 2013, when they did not begin to taper the Fed’s bond purchases in September as markets had expected. His grades later recovered as the Fed limited its controversial quantitative easing program.


Company: cnbc, Activity: cnbc, Date: 2019-04-15  Authors: brendan smialowski, afp, getty images
Keywords: news, cnbc, companies, grade, powell, pressures, wall, message, meeting, policymakers, rates, street, fed, passing, gives, markets, feds, york, trump, rate


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