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  • edited February 1
    Whatever Powell said, it sure turned markets around. Most everything’s popping after a weak morning. The 10-Year Treasury has fallen to just over 3.4% having been over 3.5% earlier this week. Gold modestly up to $1960 - but nice 2%+ pop in the miners. ARKK up 4% for the day last look. S&P up 1% as of 3:15 PM. Of course anything can happen by end of day.

    One Bloomberg commentator calling the day’s action “a massive short cover…” Could be correct considering the widespread bearishness that’s been well documented in some of the posts here.

    Edit: Inexplicably, oil has fallen sharply today. Not what one might expect …
  • Notes from FOMC Statements & Powell's Presser

    Fed funds rate hikes +25 bps to 4.50-4.75%; (bank) reserve balance rate 4.65%; discount rate 4.75%; gradual rate hikes with at least "a couple more" hikes. Wait to see the FOMC Minutes for discussions related to pause/pivot. The QT continues at -$60 billion/mo for Treasuries and -$35 billion/mo for MBS (total QT -$95 billion/mo).

    Financial conditions remain restrictive. Stock and bond markets are just one factor. The Fed and the bond market differ on how fast the inflation will be coming down. The Fed thinks that we are far from +2% average inflation target as PCE is +5.0, core PCE +4.4%. Price declines are visible in goods, but not in services yet. Housing has weakened, but the labor market and wage growth remain strong. Covid-19 is no longer seen as an economic risk.

    Debt-ceiling must be raise timely to prevent chaos; the Fed is an agent of the Treasury and cannot protect from consequences of failure; there is no coordination with the ongoing QT.

    State and local governments are flushed with cash and those projects may contribute to economic activity.

    Overtightening is preferred over under-tightening.

    Soft landing is possible and recession may be avoided.

    In the market actions that I kept an eye on, the stock market was strong and in the bond market, all Treasury rates fell (on a day of Fed rate hike announcement).
  • Uncle p

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