Fed

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

The Fed Should Give It A Rest

Mar 20, 2023 1 min read paid

In his previous press conference on February 1, 2023, Fed Chair Jerome Powell mentioned the word “restrictive” 10 times. It was mentioned mostly in the same context as the following: “And we said that we continue to anticipate that ongoing increases in the [federal funds] target range will be appropriate in order to attain that stance of sufficiently restrictive monetary policy that will bring inflation down to 2%.”

Ed Yardeni

The Economic Week Ahead: March 20-24

Mar 19, 2023 2 min read

The FOMC always seems to take center stage in the financial markets these days, and will certainly do so on Wednesday, when the next two-day meeting of the FOMC will end around noon. It will be followed by the release of the FOMC's statement at 2:00 pm and Fed Chair Powell's presser at 2:30 pm. He should be less hawkish than he was during

Ed Yardeni

Inflation: Everything Everywhere But Less So

Mar 14, 2023 1 min read paid

And the Academy Award for the Biggest Economic Surprise of 2022 goes to . . . inflation. It has defied Fed expectations by being both transitory and persistent: Consumer goods inflation has been transitory, while consumer services inflation has been persistent. In any event, overall measures of consumer inflation continue to moderate. Consider the following: (1) The New York Fed’s consumer expectations survey was released on Monday with February’s results. It

Ed Yardeni

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