Fed

2022 - 7 - 28

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Image courtesy of "Reuters"

Fed to unveil another big rate hike as signs of economic slowdown ... (Reuters)

With the Federal Reserve expected to hike its key interest rate by three-quarters of a percentage point on Wednesday to battle high inflation, ...

The U.S. right now is "a world of paradox." A number of Fed officials at various points since the start of the year have said they thought inflation had peaked, only to be caught out as prices continued to rise faster. New employment data scheduled to be released next week will show whether robust job creation, considered an important strength of the U.S. economy right now, continued in July. The U.S. economy "is likely to have contracted in the first half of the year, but job growth remains robust. General Motors Co (GM.N), for its part, said it had eased hiring and delayed planned spending in response to inflation and to hedge against a possible broader slowdown. Fears of a stalling economy were stoked late on Monday when Walmart Inc (WMT.N), whose massive footprint offers a broad view of consumer behavior, cut its profit outlook and said inflation had pressed shoppers to spend their money on food and fuel instead of higher-margin discretionary items like electronics and apparel. Register now for FREE unlimited access to Reuters.com To some economists that has heightened the risk of error, since data on prices may lag the impact of rising rates on the economy and prompt the Fed to continue its monetary policy tightening in the midst of a slowdown. Register now for FREE unlimited access to Reuters.com Register now for FREE unlimited access to Reuters.com Parts of the U.S. bond market are signaling an increased likelihood of recession, with yields on 2-year U.S. Treasury notes now higher than they are for 10-year Treasuries, a possible sign of lost faith in near-term economic growth and reflecting a possibility the Fed may be forced to cut rates within a relatively short span of time. The anticipated increase in the target federal funds rate, the Fed's key tool in trying to lower inflation from a four-decade high, will bring the U.S. central bank to a mile marker of sorts as it reaches a level of around 2.4% that is estimated to no longer encourage economic activity.

Federal Reserve issues FOMC statement (Federal Reserve)

Recent indicators of spending and production have softened. Nonetheless, job gains have been robust in recent months, and the unemployment rate has remained ...

In assessing the appropriate stance of monetary policy, the Committee will continue to monitor the implications of incoming information for the economic outlook. The Committee would be prepared to adjust the stance of monetary policy as appropriate if risks emerge that could impede the attainment of the Committee's goals. The Committee seeks to achieve maximum employment and inflation at the rate of 2 percent over the longer run. In addition, the Committee will continue reducing its holdings of Treasury securities and agency debt and agency mortgage-backed securities, as described in the Plans for Reducing the Size of the Federal Reserve's Balance Sheet that were issued in May. The Committee is strongly committed to returning inflation to its 2 percent objective. Russia's war against Ukraine is causing tremendous human and economic hardship. Recent indicators of spending and production have softened.

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Image courtesy of "CNA"

Fed unveils 75-basis-point rate hike, says another 'unusually large ... (CNA)

WASHINGTON: The Federal Reserve raised its benchmark overnight interest rate by three-quarters of a percentage point on Wednesday (Jul 27) in an effort to ...

The yield on the 10-year note was little changed. "While another unusually large increase could be appropriate at our next meeting, that is a decision that will depend on the data we get between now and then," Powell said. The policy rate is now at the level most Fed officials feel has a neutral economic impact, in effect marking the end of pandemic-era efforts to encourage household and business spending with cheap money. "It doesn't make sense that the US would be in recession." "Restoring price stability is just something we got to do," Powell said. Advertisement

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Image courtesy of "Bloomberg"

Stocks Defy Naysayers as Fed-Hike Premium Shrinks: Markets Wrap (Bloomberg)

The stock rally gained traction, defying calls from skeptics in the aftermath of the Federal Reserve decision, with traders paring bets on rate hikes as the ...

Bond yields sank, and swaps referencing policy meeting dates showed bets the fed funds rate will peak around 3.25% before the end of 2022, less than 100 basis points above its current level. Equities climbed to a seven-week high, led by defensive groups, which are often sought after during challenging times. The stock rally gained traction, defying calls from skeptics in the aftermath of the Federal Reserve decision, with traders paring bets on rate hikes as the drumbeat of recession grew louder amid an ugly economic print.

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Image courtesy of "Bloomberg"

Treasury Traders Slash Fed-Hike Expectations as Economy Shrinks (Bloomberg)

Treasuries rallied, dragging yields down sharply, as traders pared expectations for how much policy tightening the Federal Reserve will do based on a weak ...

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Image courtesy of "Bloomberg"

Key Takeaways From Fed Decision to Raise Rates 75 Basis Points (Bloomberg)

The Fed unanimously raises its benchmark rate by 75 basis points to a range of 2.25%-2.5%, in line with expectations, and anticipates the further increases in ...

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Image courtesy of "Anadolu Agency"

100 basis points Fed rate hike unlikely in September as inflation ... (Anadolu Agency)

Ryan Sweet says difficult to argue US economy is in recession when it is creating half a million jobs per month - Anadolu Agency.

"I do not think the US is currently in a recession. GDP is one of many factors that the NBER considers when assessing if the US is in a recession. Powell told reporters Wednesday that the labor market is very strong. The hike of 75 basis points on Wednesday came as consumer and producer inflation levels are hovering around their highest levels in 40 years. The president said in a statement Thursday that "it’s no surprise that the economy is slowing down as the Federal Reserve acts to bring down inflation." Sweet, on the other hand, said it is difficult to argue that the US is in a recession when it is creating 400,000 to 500,000 jobs per month.

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Image courtesy of "The Economist"

The Fed is no longer taking baby steps to rein in inflation (The Economist)

Wednesday's rise in interest rates is part of the fastest monetary tightening in years | Graphic detail.

The rapid rise in rates marks a departure from the Fed’s traditional approach of making small, incremental adjustments over a long period. In June the Bank of Canada surprised markets with a one-percentage-point rate increase. Futures markets now expect the rate to rise to 3.4% by the end of 2022, up from 0.8% in December (see chart).

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Image courtesy of "CNBC"

Asia-Pacific markets are mostly higher after the Fed hikes rates (CNBC)

Shares in the Asia-Pacific region were mostly higher on Thursday following the U.S. Federal Reserve's decision to raise rates by 75 basis points.

The Japanese yen strengthened to 135.45 per dollar, after weakening past the 137 level this week. "Persistently high inflation has no question caused global central banks to have to pivot. And that has raised the recession risks.Mark KieselCIO, global credit, Pimco Among the major markets, only Hong Kong shares slipped. Shares of the company were 0.16% higher at the close on Thursday. Expectations for a 50 basis point increase in September were at 66% on Thursday morning in Asia, according to the CME Group's FedWatch Tool. The Fed said it is strongly committed to reducing inflation. "The immediate priority is getting a grip on inflation, but we think the Fed will switch to 50bp hikes at the September and November FOMC meetings with a final 25bp hike in December," they added. SINGAPORE — Shares in the Asia-Pacific region were mostly higher on Thursday following the U.S. Federal Reserve's decision to raise rates by 75 basis points to fight inflation, a move that was widely expected. - Shares in the Asia-Pacific region were mostly higher on Thursday following the U.S. Federal Reserve's decision to raise rates by 75 basis points to fight inflation, a move that was widely expected. "A lot could happen in that time so it is unsurprising that the Fed is being somewhat vague in its forward guidance," the analysts wrote. The Shanghai Composite gained 0.23% to 3,283.14 while the Shenzhen Component was up 0.23% at 12,428.72. The benchmark Hang Seng index was 0.2% lower in the final hour of trade following a Thursday rate hike by the central bank.

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Image courtesy of "The Business Times"

Fed jacks rate up by 75 basis points; another big hike may follow if ... (The Business Times)

THE Federal Reserve said on Wednesday it would not flinch in its battle against the most intense breakout of inflation in the United States since the 1980s ...

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