Bank Deals Blog: Fed / Banking News

With the next Fed meeting just a week away, it’s time for another Fed summary with a preview of what to expect. The two-day meeting is scheduled to start on Tuesday, November 1st with the statement released at 2:00pm EDT on Wednesday, November 2nd. At 2:30pm, Fed Chair Powell’s post-meeting press conference will take place. There will be no update to the Fed’s Summary of Economic Projections (SEP) at this meeting.

Expectations are high for another 75-bp rate hike. This would be the fourth straight 75-bp rate hike since June, and...

With the next Fed meeting just a week away, I thought this would be a good time for another Fed summary with a preview of what to expect. The two-day meeting is scheduled to start on the 20th with the statement released at 2:00pm EDT on Wednesday the 21st. In addition, the Fed will release an update to its Summary of Economic Projections (SEP). At 2:30pm, Fed Chair Powell’s post-meeting press conference will take place.

Before today, expectations were high that the Fed would hike 75 bps. With the August CPI...

After four weeks since my last Fed summary, I thought this week after the Fed’s Jackson Hole Economic Symposium would be a good time for a new summary. Top economists from the Fed and other central banks attend Jackson Hole, and news is often made by the Fed Chair’s speech. Fed Chair Powell's Jackson Hole speech on Friday was a little more hawkish than had been expected, and thus the odds of another 75-bp rate hike at the Fed’s September 20-21 meeting have increased some. The speech didn’t put to...

Future Fed summaries will no longer be published every Tuesday. Instead, the summaries will be published around once a month, typically one or two weeks before Fed meetings and after any important news on monetary policy. I’ll put more emphasis on the Wednesday summaries that cover rate changes and top rates of CDs and liquid accounts.

The Fed increased the target federal funds rate by 75 bps last week. It’s the second straight 75-bp rate hike, and it raises the target to the same level as the peak of the 2015-2018...

The FOMC meeting will conclude on Wednesday with the statement scheduled for release at 2:00pm EDT. Fed Chair Powell’s press briefing is scheduled for 2:30pm ET. Expectations are high that the Fed will announce a 75-bp rate hike.

If the Fed hikes 75 bps on Wednesday, the target federal funds rate will be back to the peak level reached during the last cycle (2.25%-2.50%). That would be about 4.5 months of rate hikes that would equal the three years of rate hikes from 2015 to 2018.

The fast pace of the Fed...

The release last Wednesday of the June CPI report, which showed inflation at a four-decade high, had the markets and many economists thinking that the Fed would again increase the size of its rate hike, this time to 100 basis points (bps) at its July 26-27 meeting. By the end of Wednesday, the Fed Fund futures market (via the CME FedWatch Tool) was showing odds of a 100-bp rate hike to be 80%, up from 9% the day before. Those high odds didn’t last. Fed officials started to downplay the...

Since my last Fed summary on July 5th, the 10y-2y spread (the difference between the 10-year and 2-year Treasury yields) has been negative. That inversion of the yield curve has added to the worries that the economy is heading toward a recession. Other conditions contributing to this worry include the falling oil and gold prices and a decade low in confidence among small-business owners.

The major economic data for this week is the June CPI that will be released Wednesday morning. The consensus is for an increase of 1.10% (MoM) and...

Signs that the economy is heading toward recession grew in the last week. The latest estimate of second quarter GDP was released last Friday by the Atlanta Fed. The estimate showed a 2.1% decline of the GDP in the second quarter. That follows a GDP decline of 1.6% in the first quarter.

Not all economic data is pointing to a recession. As described in this WSJ piece, “economic output is down but the job market is strong, unlike in previous recessions.” On Friday, the Labor Department will be releasing the June...

Future interest rates will depend heavily on how inflation and the economy evolves this year. The Fed will want to see a series of declining inflation readings before it transitions to 25-bp rate hikes and then to no rate hikes. That won’t happen before its July 26-27 meeting. Another 75-bp rate hike is likely, and a rate hike of at least 50 bps is very likely.

If the economy is slowing, that could bring down inflation, and that may allow the Fed to transition to no rate hikes and eventually rate...

The Fed’s 75-bp rate hike last week had the markets worried about a recession. The S&P 500 index had its largest weekly decline since March 2020. There is growing concern that the Fed’s inflation-fighting rate hikes will push the economy into a recession. Fed Chair Powell was asked about this risk in the post-meeting press conference. Here’s part of the Fed Chair’s reply:

When the markets realized that a 75-bp was going to happen, Treasury yields surged. Fed Chair Powell also was pretty resolute in his press conference in the need...