Treasury Security: When the Federal Reserve decided to execute a new course of Monetary Policy in November, it had a problem.
PHOTOS: Federal Reserve in pictures
It wanted to buy more longer-term Treasury securities, but it was already nearing its concentration limit for the amount of each specific Treasury Security it could hold.
VIDEOS: Federal Reserve in videos
But since the rule was self-imposed, it lifted the limit, effectively doubling the amount it can purchase of any given Treasury Security issue. This is a pretty big change. The Central Bank had temporarily relaxed its 35 ...
Feds Bullard: Full of Self-Contradictions
James Bullard, President of the Federal Reserve Bank of St. Louis was on CNBC Monday, December 20, 2010 mostly defending the Fed’s Controversial $600 billion Treasury purchasing program (QE2) announced in Nov.
What struck me as totally self-contradictory were Bullard’s statements regarding the QE2, treasury yield, Inflation expectations, and inflation, which I will outline and rebuff below.
Bullard – Higher Treasury Yield = QE2 Success
During the interview, aside from the ...
China may try new ways to manage bank credit
Beijing | Tue Dec 21, 2010 8:58am EST
Beijing (Reuters) - China's Central Bank is considering changing a key component of its Monetary Policy management by altering the way it manages bank credit, three sources close to the matter told Reuters on Tuesday.
Under the proposed changes, the People's Bank of China (PBOC) may judge how much a bank can lend by looking at its capital adequacy ratio, Liquidity conditions and provisions for bad loans.
That means the PBOC may set different deposit reser...
Fed Extends Currency Swap Lines Over Eurobank Dollar Funding Concerns
The party line is everything is fine in bank land….even Eurobank land. But some recent developments suggest otherwise.
The business news on Europe has pretty much daily updates on the unfolding and linked Sovereign Debt/ bank solvency crisis. The officialdom insists this looming problem can be resolved but most observers think it can’t be in the absence of a fiscal union, which is a political bridge too Far Right now.
In a not-widely-noticed replay of pre-crisis conditions, the co...
First POMO Of The Day Closes, Brings Fed's Treasury Debt Holdings To $999 Billion
, auctioned off less than a month ago, meaning the Primary Dealers continue to flip bonds from auction straight back to the Fed, making a few million in the process each and every time. And while not even POMO matters anymore, in a market entirely dominated by Delta, i.e., Goldman (even Joe Kernen earlier announced on live TV that "Goldman can do whatever it wants in the futures market."), trades, and where the cumulative TICK is now progressively negative, the only thing that may be of relevanc...
Question #10 for 2011: Monetary Policy
by CalculatedRisk on 12/21/2010 12:57:00 PM
Over the weekend I posted some questions for next year: Ten Economic Questions for 2011. I'll try to add some predictions, or at least some thoughts for each question - working backwards - before the end of year.
Remember, I have no crystal ball and I'm sure many people will disagree. Also many of the questions are interrelated. The question on Monetary Policy depends on Inflation (question #9) and the Unemployment Rate (question #6). And the unemplo...
Bank Of Japan Holds Pat; Slightly Cuts Output View
TOKYO -- The Bank of Japan held pat on Monetary Policy as widely expected Tuesday and maintained its overall assessment of The Economy, saying it's showing signs of a moderate recovery. But it tweaked down its view on output, saying it's recently declined slightly. The BOJ's vote to keep Interest Rates unchanged in a range of zero to 0.1% was unanimous. The Central Bank said in a statement it will steadily purchase various assets and provide longer-term funds through its 35 Trillion yen ($418 bi...
Ron Paul vs. the Federal Reserve
Having recently been named head of the House subcommittee on domestic Monetary Policy, Ron Paul is looking forward to the chance to butt heads with the Federal Reserve, a longtime object of his scorn. The Texas congressman, who last year wrote the book End the Fed, fundamentally disagrees with the power that the system has over the value of paper money. "What I'm really asking for is competition, to get rid of the monopoly power of the Fed, because they don't have legitimate power to do what the...
Where is our Solon?
At the Fiscal Times Mark Thoma has a very sensible opinion piece, "A Smarter Bailout Could Have Shortened the Recession", in which he argues that we should have had a policy specifically geared to a "Balance Sheet recession", since that is what we're in:
Recessions can occur for a variety of reasons. For example, oil price shocks, Stock Market crashes, Housing Bubbles, monetary shocks, and Productivity shocks can all lead to economic downturns. However, curiously, while the effects of a reces...
ECB concerned by Irish bank bailout law
Frankfurt/DUBLIN | Mon Dec 20, 2010 7:34am EST
Frankfurt/DUBLIN (Reuters) - The European Central Bank has expressed "serious concerns" that a new law in Ireland could force the Central Bank to take losses on the collateral it accepts in exchange for loans to commercial banks.
Ireland parliament approved on Wednesday Legislation which will give the government extensive powers to restructure the banking sector, including the power to impose losses on subordinated bondholders and transfer deposi...
ECB concerned by Irish bank bailout law
Frankfurt/DUBLIN | Mon Dec 20, 2010 7:34am EST
Frankfurt/DUBLIN (Reuters) - The European Central Bank has expressed "serious concerns" that a new law in Ireland could force the Central Bank to take losses on the collateral it accepts in exchange for loans to commercial banks.
Ireland parliament approved on Wednesday Legislation which will give the government extensive powers to restructure the banking sector, including the power to impose losses on subordinated bondholders and transfer deposi...
UK economic growth in 3rd quarter revised downward
Britain's economy grew by 0.7 percent in the Third Quarter, less than the 0.8 percent first estimated, official Statisticians said Wednesday. The Office for National Statistics also revised down its Second Quarter growth figure, to 1.1 percent from 1.2 percent, due to weaker construction activity than earlier calculated. Vicky Redwood, senior U.K. Economist at Capital Economics, said details within the report were a mixed bag of signals. Government Spending now appears to be a smaller component ...
The Federal Reserve: Aging Magician of the Welfare State
December Currency deposits__ supply_ growth rate increase__
2005 728.9 3,233.3 ...
EURO GOVT-Bund yields at record lows, peripherals lag
Fri Aug 20, 2010 9:02am EDT
* Bund yields at record lows as U.S. growth fears rise
* ECB Weber's Liquidity comments boost Bunds, Euribor
* U.S. Treasuries favoured over Bunds
* Peripheral euro Debt spreads seen wider
By George Matlock
London, Aug 20 (Reuters) - Longer-dated German Government Bond yields marked record lows on Friday, chasing buoyant U.S. Treasury prices after an ECB rate-setter's comments on extending funding to banks fuelled concerns about the pace of the global recovery.
Aft...
Extended Fed Currency Swaps Not Sign of Fresh Concern
By Michael S. Derby
The Federal Reserve ’s extension of it currency swap arrangements with other major Central Bank reflects continued unease around the state of European Financial Markets.
That said, the decision to maintain the swap lines with the Bank of Canada , Bank of England , the European Central Bank , the Bank of Japan and Swiss National Bank , should be viewed more as a protective action on the part of American officials. It is not, most Economists reckon, a sign that some new ...
Hedge funds may skirt direct Fed scrutiny: source
By Rachelle Younglai and Dave Clarke
WASHINGTON | Mon Dec 20, 2010 3:00pm EST
WASHINGTON (Reuters) - The Federal Reserve does not believe any one Hedge Fund can topple the Financial System and therefore the private pools of capital may escape direct supervision by the Central Bank, an industry source familiar with the Fed's position said.
The newly created Financial Stability Oversight Council, which includes the Treasury Secretary and 14 U.S. supervisors, including the Fed, are in the early ...
Fed throws euro banks a lifeline
Fed throws euro banks a lifeline
Posted by Colin Barr
December 21, 2010 4:19 pm
For an outfit whose policies supposedly are plunging the world into unspeakable conflict, the Federal Reserve is doing an awful lot to avoid another meltdown.
The Fed said Tuesday it would extend The Dollar swap lines it provides to Central Banks in Europe, Japan and Canada in a bid to avoid a cash crunch like the ones seen to such devastating effect in 2008.
Your dollars, our problem?
The swap lines, under which...
Hedge funds may skirt direct Fed scrutiny: source
WASHINGTON (Reuters) - The Federal Reserve does not believe any one Hedge Fund can topple the Financial System and therefore the private pools of capital may escape direct supervision by the Central Bank, an industry source familiar with the Fed's position said.
The newly created Financial Stability Oversight Council, which includes the Treasury Secretary and 14 U.S. supervisors, including the Fed, are in the early stages of determining which non-bank firms pose a threat to the financial system....
Economist recommends raising rates to 2% to stimulate lending
Once again, another Economist telling us that we should raise the benchmark Federal Funds Rate to 2%. Steve Hanke is an Economics Professor at Johns Hopkins and a Senior Fellow at the Cato. I would recommend 1.5%, but that is just a guess. Stay tuned as we have a more substantive piece coming up about where the Interest Rates should really be. Via Cato: In the monetary sphere, the Fed has, in a standard Keynesian manner, flooded The Economy with high-powered base money since the onset of the cr...
Major indexes poised for double-digit gains for the year
U.S. stocks rose modestly Tuesday but managed to close at their highest levels in more than two years as investors set their sights on 2011. The Dow Jones industrial average rose 55 points, or 0.5%, led by gains in shares of American Express, Bank of America and JPMorgan Chase. The blue chip index finished at 11,533, its highest level since August 29, 2008. The S&P 500 added 8 points, or 0.6%, with Adobe and Jabil Circuit among the biggest winners. The broader index closed at its highest lev...
THIS IS NOT THE HOPE I WAS LOOKING FOR: Government liabilities rose $2 trillion in FY 2010: Treasur
THIS IS NOT THE HOPE I WAS LOOKING FOR: Government liabilities rose $2 Trillion in FY 2010: Treasury. “The U.S. government fell deeper into the red in fiscal 2010 with net liabilities swelling more than $2 Trillion as commitments on government Debt and federal benefits rose, a U.S. Treasury report showed on Tuesday. The Financial Report of the United States, which applies corporate-style accrual Accounting methods to Washingt...
Change Has Come to Congress
The advocates of Big Government are now singing a different tune. A new Congress begins two weeks from today, and if the American People sense that change is coming, they’re right. We got a preview last week when the president signed a bill that extends current income-tax rates for the next two years. After insisting for the past two years that the best way to help The Economy was to send Trillions of dollars to Bureaucrats in Washington, here was the president praising a Tax Cut that, as...
US Fed extends dollar lifeline for central banks
The US Federal Reserve on Tuesday extended until August an emergency tool for other Central Banks to access US dollars, amid market jitters and high demand for the safe haven greenback. The deal, which had been due to expire in January, allows the Central Banks of Britain, Japan, Canada and Switzerland, as well as the European Central Bank, to exchange local currency for US dollars. The swap agreements were sealed in May, but as a Debt crisis and slow Economic Recovery continues to roil markets ...
Unlikely commercial real estate rebound
Riding the unlikely commercial Real Estate rebound
Posted by Colin Barr
December 20, 2010 6:41 am
For years commercial Real Estate has been billed as the next big train wreck. So why are some investors shouting all aboard?
A slowly recovering economy is part of it, though no one expects to make a quick killing on loans and securities tied to Office Buildings, hotels, Shopping Malls and the like. The bigger drivers of this rally are the low rates pushing investors to reach for yield by takin...
Unlikely commercial real estate rebound
For years commercial Real Estate has been billed as the next big train wreck. So why are some investors shouting all aboard? A slowly recovering economy is part of it, though no one expects to make a quick killing on loans and securities tied to Office Buildings, hotels, Shopping Malls and the like. The bigger drivers of this rally are the low rates pushing investors to reach for yield by taking on more risk, and the wide open junk Bond Market that has allowed lots of companies once left f...
BOJ holds fire, Shirakawa may assure on bond yields
Tokyo (Reuters) - The Bank of Japan kept Monetary Policy on hold on Tuesday but warned of weakening factory output and business sentiment, assuring markets that it was focusing on downside risks to growth that may trigger further easing ahead.
The decision to stand pat on policy was widely expected as the Central Bank likely felt no imminent need to top up its new asset buying scheme, with Tokyo stock prices on the rise and the yen well off a 15-year high hit against The Dollar last month.
But ...
Feds Arrest 119 Mafia Operatives; Claim Major Breakthrough
Tunisia Opposition Strikes And Ex-Ruler's Relatives Arrested
California Financial Emergency Renewed - Budget Gap Now $25 Billion
20 Years After The Gulf War - Leaders Reminisce
Common Cause: Why No Recusals By Supreme Court?
Hu Jintao Notes Human Rights Issues; Ignores Tibet, Taiwan
Regular Army Cheers, Reservists Pose Worry: Military Suicide Stats
Gov. Rick Snyder Throws Weight Firmly Behind DIRC Project
Improvement Continues: Giffords Stands, Operates Her iPad
Gunshots On Consecutive Days Create Panic In LA Schools
If you are commenting as a guest, enter your personal information in the form provided. Don't worry, your privacy is safe.