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Post by yogibearbull on Sept 20, 2023 18:00:59 GMT
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Post by yogibearbull on Sept 20, 2023 18:04:40 GMT
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Post by Capital on Sept 20, 2023 19:31:33 GMT
I did not hear anything that I did not expect to hear. Seems like the Traders were wanting to hear something quite different.
The FED left the door open for another increase this year. At this point it would have been bad policy to close the door on any option.
From my standpoint, I am just glad we did not need to endure another increase today.
Inflation has to be 2% no matter who goes under us getting there. The FED said so.
On to the Government shutdown. The FED thing is over for now.
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Post by yogibearbull on Sept 20, 2023 19:58:59 GMT
YBB Notes FED FUND rate held at 5.25-5.50%; bank reserves rate at 5.4%; discount rate at 5.5%. Possibly 1 more hike in 2023. Real & nominal rates may change differently. The base effect is in y-o-y, but the Fed also looks at monthly (m-o-m) and shorter terms changes over rolling 3m or 6m. There is some yield-curve adjustment - longer-term rates are rising more than short-term rates & that may be because stronger economy, higher supply of Treasuries, etc. Interest rate sensitivity of the economy isn't what it used to be - may be the business & household balance sheets are stronger, some consumer savings remain. QT continues for Treasuries at -$60 billion/mo, for MBS at -$35 billion/mo (Total QT -$95 billion/mo). New SEPs were available. INFLATION remains high. Fed's target remains +2% average inflation. Core PCE removes distortions from volatile food & energy, but nominal PCE is also important. Monetary POLICY remains tight - rates are higher, real rates are positive, neutral rate may be higher, ongoing QT, tight credit conditions, known lag effect of monetary policy. ECONOMY is solid. LABOR market is strong. SOFT LANDING is plausible. EXTERNAL FACTORS - high oil/gas/gasoline prices, labor strikes, possible government shutdown, etc. There are many uncertainties around. But pandemic related distortions seem to have unwound. CONSUMER confidence low. Consumer credit rising. Surveys tend to be more negative, but consumer spending is strong. Higher rates affect households differently according to their wealth levels. There are ad-hoc surveys of nonprofits and community groups to assess what may be going on with low/moderate income groups. HOUSING is mixed. Measurements are via OERs & rent/lease increases have moderated. Housing supply is constrained. High mortgage rates discourage existing homeowners (with low-rate mortgages) from moving. ybbpersonalfinance.proboards.com/post/1182/thread |
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Post by Capital on Sept 21, 2023 11:25:21 GMT
So the current inflation number (year over year) is 3.7%. The average long-term US inflation rate is 3.2% An interesting comment I heard today on CNBC (yes I watch it sometimes in the morning) was "how much pain and suffering is the medicine to get the last one percent worth?" Personally I still think that the FED has gone far enough if not too far. How many years did we stay below the long-term average. LINK. If we spent so much time below why does it not make sense that we spend some time above the average. I just do not think the goal of 2% inflation is realistic or sustainable. |
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