Posts filed under “Federal Reserve”
From Deutsche Bank:
A striking feature of my ongoing discussions with clients is that many still believe that as a result of secular stagnation “long rates will never go up”. The problem is that holding onto that view has been expensive for the past seven weeks. Long rates in the US are driven by 1) US fundamentals, 2) Fed communication, and 3) demand for Treasuries from abroad, and it is the outlook for the rest of the world that has been a key driver of US rates recently (see also the chart in my Monthly chart book with Fed and ECB expectations). And investors are not only revising their view on the outlook for Europe at the moment. In Japan, up until H1 2014, the recovery was led by non-manufacturers and mid-sized and small companies but we are now beginning to see a broader recovery in 2015, including in capex, and the chart below shows that cash holdings in US companies are lower than cash holdings in European companies, which again are holding much less cash than Japanese companies. The bottom line is that developments over the past seven weeks show that US rates investors should be spending less time thinking about secular stagnation and instead spend more time thinking about the outlook for the rest of the world, because it is a revision of the outlook for the rest of the world that seems to be driving US rates at the moment. For more on the outlook for Japanese capex see our latest write-up here.
The never ending sturm und drang over the state of Greek debt, membership in the euro zone and the potential shocks of a debt default have moved from tragedy to comedy to monotony. The solution is simple. It won’t be fast, it won’t be easy, but it will be a huge improvement for all concerned….Read More
Over the years, I have spilled far too many pixels on how overhyped the monthly nonfarm payroll report is. What matters isn’t any single month, given how noisy and subject to future revisions the provisional release actually is. The recency effect makes you place a greater emphasis on what just occurred in a data series, a sign of the evolutionary leftover code hanging around your wetware….Read More
The Fed Raising Rates? David Kotok Cumberland Advisors, May 26, 2015 It’s not about when; it’s about the path to get there. Suppose the Fed lifts rates on the short end of the yield curve by a quarter point in September. Or December. Will it really make a difference? Suppose the Fed’s…Read More
Why Are Interest Rates So Low? Marco Del Negro, Marc Giannoni, Matthew Cocci, Sara Shahanaghi, and Micah Smith Liberty Street Economics, May 20, 2015 In a recent series of blog posts, the former Chairman of the Federal Reserve System, Ben Bernanke, has asked the question: “Why are interest rates so low?” (See part 1, part…Read More
Stan Druckenmiller is betting on the unexpected. With one of the best long-term track records in money management, he is anticipating three surprises: Improving economy in China, Rising oil prices, and no Federal Reserve interest rate increase in 2015.
Stan Druckenmiller: Zero-Interest Rates Unnecessary