Fed

Markets' Message to the Fed: Just Say No to More Rate Hikes

May 2, 2023 2 min read paid

The stock market sent a message to the FOMC today: Cease and desist from any more rate hikes, please. The stock market selloff was led by another rout of the Financials sectors of the S&P 1500. Here is what they did today and since March 8, the day before SVB imploded: S&P 500 LargeCaps (-2.3%, -7.3%), S&P 400 MidCaps (-3.2, -14.

Ed Yardeni

The Economic Week Ahead: May 1-5

Apr 29, 2023 1 min read paid

This is another big week for earnings reports, which have been mostly better than expected so far. In addition, the FOMC meets on Tuesday and Wednesday, when Fed Chair Jerome Powell holds his après-meeting presser at 2:30 p.m. In our opinion, it's a toss-up whether the Fed will do none or one 25bps rate hike. But our subjective odds of an announced pause is 75% either

Ed Yardeni

Another Week Without a Banking Crisis

Apr 29, 2023 2 min read

Our mantra since the start of the banking crisis on March 10 has been that any day without a banking crisis is a good day for the stock market. Now our mantra is that any week without a banking crisis is a good week for the stock market. It was a good week for stock prices last week, especially on Friday, even though First Republic Bank continued its meltdown, which

Ed Yardeni

Fed 's H.4.1 Shows Banking Crisis Not Getting Worse

Apr 21, 2023 2 min read paid

The Fed's H.4.1 report is released every Thursday at 4:15 pm. It shows the Fed's assets and liabilities. Yesterday's report shows that the Fed's total assets edged down to $8.7 trillion after rising since early March when banks scrambled to borrow from the Fed's liquidity facilities to offset deposit outflows during the SVB-induced banking crisis (chart)

Ed Yardeni

Banking Crisis May Be Abating

Apr 15, 2023 2 min read paid

We've previously observed that any day without a banking crisis is a good day for stocks. SVB imploded on Friday, March 10. On Sunday, March 12, the Fed and FDIC took actions to avoid additional bank runs. The S&P 500 is up 7.1% since March 10 led by Information Technology (9.8%), Health Care (8.6), and Utilities (7.6%) (chart). All of the sectors

Ed Yardeni

Inflation, the Fed & Too Much Happiness

Apr 12, 2023 2 min read paid

The S&P 500 fell slightly today despite the better-than-expected March CPI data this morning. Inflation continues to moderate. The headline CPI inflation rate fell from 6.0% y/y in February to 5.0% in March. However, the core rate edged up from 5.5% to 5.6%, but slowing rent inflation is likely to cool this rate in coming months. On Monday, the Federal Reserve Bank of

Ed Yardeni

On the Lookout for a Bank Credit Crunch

Apr 9, 2023 3 min read

The Silicon Valley Bank imploded on Friday, March 10. To avert a widespread bank run, the Fed announced, on Sunday, March 12, that liquidity would be provided by the Bank Term Funding Program (BTFP). The Fed's press release stated that this new liquidity facility will offer loans of up to one year in length to financial intermediaries pledging US Treasuries, agency debt and mortgage-backed securities, and other qualifying

Ed Yardeni

Fed Backstops the Banks

Mar 31, 2023 2 min read

The Fed has the banks' backsides covered. The Fed can't insure deposits, but it can guarantee that the banks have access to plenty of liquidity to meet deposit outflows without having to sell securities from their bond portfolios at a loss as happened to Silicon Valley Bank (SVB), forcing it into receivership on March 10. The banks are required to put up bonds as collateral for their

Ed Yardeni

What's On The Fed's Books?

Mar 23, 2023 2 min read paid

The Fed provides a weekly snapshot of its balance sheet in its statistical release H.4.1. It comes out on Thursdays. The latest one for the week ended March 22 can be compared to the one for the week ended March 8 to see how the meltdowns of Silicon Valley Bank and Signature Bank (on March 9 & 10) affected the Fed's balance sheet. The total assets

Ed Yardeni

Can We Bank on Yellen & Powell?

Mar 22, 2023 3 min read

Stock prices fell after Fed Chair Jerome Powell's press conference today, which was actually relatively dovish. He said that inflation remains too high, but the banking crisis might force the Fed to pause tightening soon. Of greater concern to the stock market was that US Treasury Secretary Janet Yellen said at a congressional hearing this afternoon: “I have not considered or discussed anything having to do with blanket

Ed Yardeni

Fed Hawks Down!

Mar 22, 2023 1 min read

The FOMC raised the federal funds rate by 25bps to 4.75%-5.00%. The committee's statement reassuringly noted: "The U.S. banking system is sound and resilient." Nevertheless, the recent banking crisis undoubtedly turned Fed officials less hawkish. Fed Chair Jerome Powell in his post-meeting presser said that inflation remains too high, yet the median forecast of the federal funds rate in the FOMC'

Ed Yardeni

The Fed Has Done Enough

Mar 21, 2023 2 min read

The banking crisis might be equivalent to a 100bps hike in the federal funds rate. We are just guessing, but financial conditions have surely tightened a lot as a result of the SVB earthquake and its aftershocks. Further hikes in the federal funds rate are no longer necessary to get it into restrictive territory as Fed officials have been aiming to do since they started the latest monetary policy tightening

Ed Yardeni

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