Free Trial to
Action Economics Professional
For financial professionals only
Must have a work email address and phone number so you can be contacted
|
|
|
|
Fed Policy Outlook
March 3, 2010
|
Analytical Contacts:Kim Rupert +1 650-401-6727 kim.rupert@actioneconomics.com
Michael Wallace + 1 650-563-9370 michael.wallace@actioneconomics.com |
 Tuesday, March 9, 2010
|
|
|
|
|
Action Bullets
- Today's Beige Book isn't expected to have any fresh insights on the economy, indeed likely to reiterate moderate growth, but could make some concession to the weather
- Fed Chairman Bernanke's Humphrey Hawkins contained a lot of elements from his Feb 10 written testimony as he generally outlined the Fed's exit strategy and attempt to normalize rates (24-Feb)
- Fed Board raised the discount rate 25 bps to 0.75% (18-Feb); the move was well telegraphed (see below) though the timing caught us and the markets off guard
- FOMC left rates unchanged with 0% to 0.25% target range and reiterated "exceptionally low" rates for an "extended period" language at Jan 27 meeting, but hawkish Hoenig dissented (9-1 vote) against the need for that statement
- Fed announced a reduction in the maximum term for primary credit loans to 28 days from 90 days previously (17-Nov-09)
- Senior Loan Officer Survey showed banks continued to tighten terms and standards, though the net percentage of those doing so continued to decline
- Fed began buying Treasury's outright (under QE regime) on March 25 and finished at end of Oct
- Fed began buying MBS on January 5 as part of the $500 bln purchase plan announced on November 25, 2008; the size was upped by $750 bln to $1.25 tln at March 18, 2009 FOMC to a total of $1.25 tln by year end
- Fed begins buying agency debt outright (under QE) on December 5, originally planing to purchase up to $200 bln this year, but revised it to $175 bln through Q1 2010
- FOMC upgraded its forecast for 2010 growth slightly in January 26, 27 minutes versus November
- Fed funds futures remain irrelevant under ZIRP policy regime, but implied rates suggeting gradual rise from mid 2010
|
|
|
|
|
Action Economics commentary has been prepared either from publicly available information
or reflects the opinions of the author. Information contained in this website is believed
to be reliable but may not have been independently verified. Action Economics, LLC does not
guaranty, represent or warrant, or accept any responsibility or liability as to, the accuracy,
completeness or appropriateness of the information contained in this website. At no time will
Action Economics make specific recommendations for any specific person, and at no time may a
reader, caller or viewer be justified in inferring that any such advice is intended. Information
contained herein may not be current due to, among other things, changes in the financial markets
or economic environment. Opinions reflected in the materials are subject to change without notice.
Forecasts represent estimates. Information provided by Action Economics is expressed in good faith,
but it is not guaranteed. Long-term success trading or investing in the markets demands recognition
of the fact that error and uncertainty are part of any forecasting effort. Investing carries risk
of losses. Information provided by Action Economics does not constitute, and should not be used
as a substitute for, tax, legal or investment advice. Please ask your broker or your advisor to
explain all risks to you before making any trading and investing decisions. The content of this website
may not be altered, reproduced or redistributed, in whole or in part, without the prior written consent of
Action Economics, LLC.
|
|
