How Will Uncertain Inflation Outlook Impact Stock Market?
The June 16 Federal Open Market Committee (FOMC) meeting Q&A session with Chairman Jay Powell and recent comments from The Fed have signaled two potential inflation rate hikes in 2023. Two days later, James Bullard, president of the Federal Reserve Bank of St. Louis, signaled there could be a rate hike as soon as 2022. With these mixed signals and upcoming FOMC meetings, how might...
Will The Federal Reserve Create a Taper Tantrum in 2021?
With the economy reopening and more Americans receiving COVID-19 vaccinations, the economy is expected to be operating on all cylinders. However, some economists and market analysts are afraid The Federal Reserve may create a “taper tantrum” if and when it starts to reduce its purchase of U.S. Treasury debt. The Fed’s current track of purchasing $120 billion of U.S. Treasury...
How Will a Steepening Yield Curve Impact Markets?
Based on data from the Federal Reserve Bank of St. Louis, the spread between the 10-year and two-year constant maturity Treasury rates increased by 66 basis points – from 0.48 percent in July 2020 to 1.14 percent by February 2021. Due to the Federal Reserve’s open market operations, two-year notes have fallen to near 0 percent, while the 10-year yield has risen higher.
Experienced...
How Will Surging Oil Prices Impact the Economy in 2021?
Now that the Keystone XL pipeline is being shut down and southern parts of the United States are experiencing extremely cold weather, how will increasing oil prices impact the economy as the COVID-19 vaccine is being rolled out?
With West Texas Intermediate (WTI) crude closing at $58.22 per barrel on Feb. 11, 2021, and likely higher due to the cold snap in the United States, the price of oil...
How Will Single Party Governing Impact the Markets in 2021?
About four in 10 Americans (41 percent) look positively toward single-party control at the national level, according to an October 2020 Gallup annual governance survey. This is compared to 23 percent of respondents desiring multiparty control. Breaking it down by party, 43 percent of Democrats want single-party rule, while 52 percent of Republicans desire single-party governance.
One notable...
How Will the Biden Administration’s China Policy Impact Markets?
The Obama and Trump administrations couldn’t have had a more different approach when it came to U.S. relations with China. As the Institute for China-America Studies (ICAS) explains, under the Obama administration, the United States favored a trade and investment approach when dealing with China, while the Trump administration had a national security focus. The ICAS believes the Biden...
How Will the Biden Administration Influence the Federal Reserve?
With the nation on the precipice of a transition of administrations on Jan. 20, 2021, there will need to be many roles filled both in and out of the White House. With the potential for Janet Yellen to replace Steven Mnuchin as the next treasury secretary, there is much speculation about how the Federal Reserve will be shaped by the Biden administration.
Predicting Changes to the Federal...
How Would a Second Stimulus Check Impact Markets?
The $1,200 stimulus check sent out to individuals had mixed impacts on our economy, based on academic research, including by the University of California-Davis. For recipients with $3,000 or more in their bank accounts, there was no positive impact on the economy. However, for recipients with bank account balances up to $500, they spent 44.5 percent of their check, on average, within 10 days...
Examining Fed’s New Targeted Inflation Policy
Looking back to 2012, the Federal Open Market Committee (FOMC) – a collaboration of the 12 regional Fed banks and the Federal Reserve Governors in Washington – came together and published a Statement on Longer-Run Goals and Monetary Policy Strategy.
This officially rang in the FOMC’s public commitment to maintain inflation at 2 percent. It is based on a yearly change in the...
How Will Monetary Policy Impact Markets Going Forward?
With gold hitting $2,000 an ounce in recent days, coupled with the Federal Reserve’s monetary policy creating a lot of liquidity, how will markets perform for the rest of 2020 and beyond?
Based on a reading from the Federal Reserve’s minutes from its July 28 to July 29 meeting, the Fed remarked that the ongoing pandemic would continue to put a strain on the economy, slowing...
