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☆ Dow futures rebound from worst week of 2024 even as traders brace for Israel response to Iran attack: Live updates
▼ + stars: | 2024-04-14 | by ( Hakyung Kim | ) www.cnbc.com time to read: +3 min

S&P 500 futures added 0.2% and Nasdaq-100 futures advanced 0.3%. The losses caused the Dow to shed 2.4% last week for its worst week since March 2023 and its second down week in a row. The S&P 500 slid 1.5% for its worst week since October 2023. Iran launched drones and missiles on Israel on Saturday night, marking the first direct attack on Israel from Iranian territory. Guha added that the a key question remaining is how Israel Prime Minister Benjamin Netanyahu will respond to the attack.

Persons: Dow, Krishna Guha, Evercore, Guha, Benjamin Netanyahu, Biden, Netanyahu, Goldman Sachs, JPMorgan Chase, Jamie Dimon Organizations: New York Stock Exchange, Iran's, Dow, Dow Jones, Nasdaq, Global Policy, Central Bank Strategy, Israel, T, Treasury, JPMorgan Locations: Israel, Iran

☆ The Fed is getting closer to ending the second part of its policy tightening
▼ + stars: | 2024-02-22 | by ( Jeff Cox | ) www.cnbc.com time to read: +4 min

While most of the market's attention has been on interest rates, the Federal Reserve is quietly getting ready to loosen policy in another respect as it prepares to slow down the shedding of assets on its balance sheet. Tapering down the roll-off could see the Fed reducing the caps in half, according to a projection from BNP Paribas. The QT program has resulted in a nearly $1.3 trillion reduction in total holdings, with the total balance sheet now standing at about $7.7 trillion. With confidence growing that inflation is easing, policymakers are looking to loosen up policy, albeit at a measured pace. So at this meeting, we did have some discussion of the balance sheet, and we're planning to begin in-depth discussions of balance sheet issues at our next meeting in March," Chair Jerome Powell said in his January post-meeting news conference .

Persons: Krishna Guha, Goldman Sachs, We're, Jerome Powell, we're Organizations: Federal Reserve, Evercore ISI, Fed, MBS, New York Fed, BNP Paribas, BNP

☆ Stubborn inflation means the Fed will be cutting rates less than the market thought
▼ + stars: | 2024-02-13 | by ( Jeff Cox | ) www.cnbc.com time to read: +5 min

If nothing else, the January inflation report released Tuesday finally appears to have convinced markets that Federal Reserve officials weren't kidding around when they said they will take a deliberate approach to cutting interest rates this year. Following the consumer price index report showing the year-over-year reading well ahead of the Fed's desired inflation goal, markets recalibrated their monetary policy expectations. The Fed "faces a challenging task in balancing economic growth and employment while trying to control inflation," he added. Indeed, the narrative of the Fed being able to start cutting early, and moving rapidly through the year, was all but dead Tuesday. The January CPI report is a "setback for the Fed and makes a May rate cut unlikely.

Persons: Ditto, —, it's, Sung Won Sohn, Dow, Jerome Powell, Jason Pride, there's, Powell, Matthew Ryan, Krishna Guha, Guha Organizations: Federal Reserve, CME, Labor, CPI, Loyola Marymount University, SS Economics, Dow Jones, US2Y, CBS, Bank of America, Citigroup, Fed, Evercore ISI

☆ Inflation is still a mixed bag, but markets don't care. They see big Fed rate cuts ahead
▼ + stars: | 2024-01-15 | by ( Jeff Cox | ) www.cnbc.com time to read: +5 min

December's inflation data provided just enough evidence to show that the pace of price increases is continuing to cool while also serving up a reminder that the war isn't won yet. One is that regardless of the headline numbers, the parts of inflation that don't fluctuate as much have been fairly stubborn. So-called sticky inflation, which includes things such as housing costs, auto insurance, medical care services and household furnishings, are indeed holding higher. On a one-month annualized basis, the measure also was at 4.6%, but that's up a full percentage point from the previous month. Fed policymakers also are attuned to the relationship between wages and inflation.

Persons: isn't, Disinflation, Jamie Dimon, cautioning, Krishna Guha, Goldman Sachs, Goldman, Ian Shepherdson, Dan North Organizations: Separate Labor Department, Federal Reserve, Nomura Global Economics, JPMorgan Chase, Evercore ISI, PPI, Citigroup, Commerce, Fed, Pantheon, Atlanta, Allianz Trade Locations: Red

☆ What higher-for-longer Fed policy will mean for the markets and economy
▼ + stars: | 2023-09-21 | by ( Jeff Cox | ) www.cnbc.com time to read: +6 min

For Fed Chair Jerome Powell, who spoke to the press after the two-day session ended, "Resetting market expectations about real rates was his most important mission," Colas said. But this week's meeting indicated that Fed officials expect rates to stay higher for longer. The thinking there is that if inflation moves lower, the Fed won't need to keep nominal rates as high because real rates will be rising. "But, until one or both of those things happen, higher real rates are the Fed's strategy to tame inflation," Colas said. "This tells us that current equity market churn is unlikely to end until bond markets have settled out."

Persons: wasn't, Nicholas Colas, Jerome Powell, Colas, Krishna Guha, Claudia Sahm, Guha, Powell, Powell's, Morgan Stanley, Ellen Zentner, Goldman Sachs, Goldman, David Mericle, Goldman doesn't, Mericle, DataTrek's Colas Organizations: DataTrek Research, Companies, Evercore ISI, U.S ., Fed

☆ The Fed could be very close to achieving one of its main policy goals
▼ + stars: | 2023-08-23 | by ( Jeff Cox | ) www.cnbc.com time to read: +4 min

If the Federal Reserve's main policy goal these days is to tighten financial conditions, then it should be pretty close to achieving its goals, according to an Evercore ISI analysis. In fact, the Fed recently set up its own measure — the Financial Conditions Impulse on Growth , or FCI-G. "The Fed will have to consider the tightening in financial conditions when setting rates in coming months, including the decision whether to hike in September." "Our base is that the Fed will not raise rates further and developments in financial variables reinforce our call." Market pricing is largely in line with the call that the Fed halts its hiking cycle after raising rates 11 times since March 2022.

Persons: Evervore, Krishna Guha, Guha, Marco Casiraghi Organizations: Federal, U.S ., Fed, FCI, Evercore ISI, Treasury, Traders, Group, Citi, Cleveland

☆ The Fed has rolled out a new index for gauging the economy that could have big implications
▼ + stars: | 2023-07-08 | by ( Jeff Cox | ) www.cnbc.com time to read: +4 min

The Federal Reserve is changing the way it looks at "financial conditions," a move that could have important ramifications for policy ahead. The Fed has been using a series of interest rate increases to tighten financial conditions and, ultimately, to bring down inflation. Essentially, the move allows the Fed to distance itself from other financial conditions models, such as those formulated by Goldman Sachs and the Chicago Fed . By contrast, the Chicago Fed index's current reading is -0.28, implying relatively loose conditions. Capital Economics noted that the FCI-G "does a better job of illustrating the tightness of US financial conditions than various other measures."

Persons: they've, Krishna Guha, Jerome, Powell, Guha, Goldman Sachs Organizations: Federal, Evercore ISI, Fed, Chicago Fed, Treasury, Dow Jones, U.S, FCI

☆ Easing inflation pressures give the Fed room to skip a rate hike. But then what?
▼ + stars: | 2023-06-13 | by ( Jeff Cox | ) www.cnbc.com time to read: +4 min

Softening inflation data for May likely has bought the Federal Reserve at least a month, though not much more, before it has to figure out what to do next. Following the CPI release Tuesday morning, markets priced in a 95% probability that the Fed will skip a hike at its two-day meeting concluding Wednesday, according to CME Group data . "The latest consumer price inflation data doesn't change the Fed outlook for a June rate hike skip, but it illustrates the 'should I stay, or should I go' dilemma that the Fed faces when considering further rate increases," wrote Gregory Daco, chief economist at EY-Parthenon. After this week's meeting, Fed officials will release their "dot plot" rate projections for the next few years, plus their collective outlook on inflation, GDP and unemployment. The retreat on inflation, then, presents both an opportunity and a challenge for a Fed that was caught off guard by the big price surge.

Persons: Gregory Daco, Jim Smigiel, Krishna Guha, Guha, Jerome Powell, Ian Shepherdson Organizations: Federal Reserve, Group, SEI, Evercore ISI, Tech, Pantheon Locations: EY

☆ The Fed could enact a 'substitute' interest rate hike at its June meeting
▼ + stars: | 2023-05-17 | by ( Jeff Cox | ) www.cnbc.com time to read: +4 min

Federal Reserve officials could talk tough enough at their June meeting that it would amount to a de facto interest rate hike. "All Fed officials are being careful not to exclude a June hike with more data to come and we would not completely exclude this either," he added. A "substitute" hike could see the rhetoric out of the June meeting reasserting the Fed's stern commitment to fighting inflation and disinclination toward easing anytime soon. But some taming in the inflation data , stronger economic signals and repeated statements from central bankers that cuts are not in their forecast have caused a shift. Fed fund futures contracts are implying a 4.585% funds rate by the end of the year, from the current 5.08%.

☆ The First Republic deal has come at a crucial point for the markets and economy
▼ + stars: | 2023-05-01 | by ( Jeff Cox | ) www.cnbc.com time to read: +4 min

Michael M. Santiago | Getty ImagesJPMorgan Chase's takeover of First Republic likely ends the panic phase of the banking crisis, with the fallout left to come in a pivotal week for markets and the economy. Following an unsuccessful effort to keep First Republic open, the largest U.S. bank by deposits reached a deal to take over the 14th-largest financial institution. With financial services covering such a wide swath of activities in the $26.5 trillion U.S. economy, the failures of Silicon Valley Bank, Signature Bank and now First Republic Bank will reverberate. Stocks nudged higher Monday morning on hopes that the worst of a banking crisis that began in early March has drifted into the rear view. "Resolving FRC should end the 7-week post SVB bank crisis phase."

☆ Inflation gauge increased 0.4% in February, as expected and up 6% from a year ago
▼ + stars: | 2023-03-14 | by ( Jeff Cox | ) www.cnbc.com time to read: +5 min

Excluding volatile food and energy prices, core CPI increased 0.5% in February and 5.5% on a 12-month basis. The consumer price index increased 0.4% for the month, putting the annual inflation rate at 6%, the Labor Department reported Tuesday. Inflation rose in February but was in line with expectations, likely keeping the Federal Reserve on track for another interest rate hike next week despite recent banking industry turmoil. Food prices rose 0.4% and 9.5% respectively. That entails core services inflation minus housing, cohort that increased 0.2% in February and 3.7% from a year ago, according to CNBC calculations.

☆ Fed's Powell heads to Capitol Hill this week, and he's going to have his hands full
▼ + stars: | 2023-03-06 | by ( Jeff Cox | ) www.cnbc.com time to read: +5 min

It was made worse by the Fed not recognizing it in 2021," said Komal Sri-Kumar, president of Sri-Kumar Global Strategies. "If you're going to have a no-landing scenario, then you're going to accept 5% inflation, and that's politically unacceptable. He has to work on bringing inflation down, and because the economy is so strong it's going to get delayed. 'Ongoing increases' aheadFor his part, Powell will have to find a landing spot between the competing views on policy. However, Guha said that Powell is unlikely to tee up the half-point, or 50 basis point, rate hike later this month that some investors fear.

☆ CNBC Daily Open: Markets fall as the Fed shows no sign of pivoting away from interest rate hikes
▼ + stars: | 2023-02-23 | by ( Yeo Boon Ping | ) www.cnbc.com time to read: +2 min

This report is from today's CNBC Daily Open, our new, international markets newsletter. CNBC Daily Open brings investors up to speed on everything they need to know, no matter where they are. Hence, interest rates need to continue rising. Despite Fed hawkishness, signs point to a no-landing scenario, which should give investors some comfort. Subscribe here to get this report sent directly to your inbox each morning before markets open.

☆ CNBC Daily Open: Markets fall as the Fed shows no sign of pausing interest rate hikes
▼ + stars: | 2023-02-23 | by ( Yeo Boon Ping | ) www.cnbc.com time to read: +2 min

☆ Brainard's move to the White House leaves a big gap for Biden to fill at the Fed
▼ + stars: | 2023-02-15 | by ( Jeff Cox | ) www.cnbc.com time to read: +5 min

In her more than eight years as a Federal Reserve official, Lael Brainard was an influential voice, particularly for the side that favored keeping monetary policy loose and interest rates low. "Brainard's departure from the Fed leaves a dove-sized hole in its monetary policy," Beacon Policy Advisors wrote in its daily newsletter Wednesday. Indeed, Brainard's influence only accelerated the longer she served as a Fed governor. Her subsequent appointment in 2022 as vice chair solidified her influence, installing her as part of the "troika" of policy-directing power that includes current Chairman Jerome Powell and New York Fed President John Williams. Some candidates outside the Fed ranks, according to Guha, include Karen Dynan, Jason Furman, Janice Eberly and Christina Romer, all of whom served under former President Barack Obama (and his vice president, Biden).

☆ Traders don't want to believe the Fed, so get used to a lot of choppiness
▼ + stars: | 2023-01-10 | by ( Bob Pisani | ) www.cnbc.com time to read: +3 min

Then Fed officials get on the tape say they're going to keep raising rates and keep them high until hell freezes over. Atlanta Fed President Raphael Bostic on Monday said the central bank should raise interest rates above 5% and stay there for "a long time." Inflation data continues to show signs of cooling, but it's still high, and the Fed doesn't want to declare victory so they keep jawboning the markets down. The source of tension is that the trading community doesn't want to believe the Fed, and many are arguing the Fed is using stale data. "Wall Street does not believe the story being spun by the Fed," Harry Katica from Saut Strategy told his clients.

☆ Fed Chair Powell is having a communication problem with the market
▼ + stars: | 2022-12-07 | by ( Jeff Cox | ) www.cnbc.com time to read: +6 min

No matter what Federal Reserve Chairman Jerome Powell tells market participants these days, it seems they only hear the good stuff. Two recent examples: First in July, when Powell hinted that smaller interest rate hikes could be on the way. Chair Powell is really trying to message the fact that the fed funds rate has to be restrictive to tamp down inflation. A month and a half later, Powell delivered an uncharacteristically terse speech at the Fed's annual Jackson Hole, Wyoming summit. One more chance So Powell heads into next week's Federal Open Market Committee meeting with another opportunity to set the market straight.

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