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U.S. stocks were higher and Treasury yields declined Wednesday following Federal Reserve’s final monetary policy decision of the year. In this, central bank officials decided to keep key interest rates at current levels and telegraphed rates would remain on hold through next year.
With the end of the year and the decade fast-approaching, Wall Street strategists have begun to deliver their expectations about where the stock market will close out 2020.
Fed Chairman Jerome Powell said Wednesday that changes to the Fed’s inflation framework, to be announced next year, will be meaningful.
U.S. Treasury yields retreated on Wednesday after the Federal Reserve’s policy statement and interest-rate projections indicated the central bank would keep rates at current levels next year.
After three rate cuts in a row, the Fed decided to leave things alone Wednesday and take a little time to see how things play out heading into the new year. The Fed’s decision to keep its benchmark Fed funds rate at a steady 1.5% to 1.75% likely didn’t come as a big surprise to anyone following the market lately. “The Committee judges that the current stance of monetary policy is appropriate to support sustained expansion of economic activity, strong labor market conditions, and inflation near the Committee’s symmetric 2 percent objective,” the statement said.
Federal Reserve Chairman Jerome Powell said on Wednesday that the central bank could potentially expand its Treasury bill purchasing program, if necessary, to include shorter-term coupon-bearing securities, while speaking in a news conference after the Fed said it would hold rates steady at 1.5% to 1.75%. Powell said that, for now, the Treasury's current pace of bill purchases of $60 billion per month was sufficient. The buying began in October and will continue through at least the second quarter of next year. The moves are intended to inject reserves back into the financial system, which may have held back banks from lending their funds freely to cash-starved market participants. As the central bank raises the level of reserves next year, the volume of the Fed's repo operations should shrink, said Powell. He also added the central bank could tweak the current repo operations to prevent a recurrence of stresses in short-term funding markets.
U.S. households paid more for energy, health care and rent in November, pushing the rate of consumer inflation up to the highest level in a year. The consumer price index rose 0.3% last month.
Do stock and bond markets care about impeachment? The stock market is preoccupied, at least as portrayed by the media, with the status of trade negotiations between the U.S. and China over a phase-one deal that would provide some tax relief to China in exchange for its commitment to increase purchases of U.S. agricultural products. “Obsessed” is more like it, with every intimation that an agreement is nearing conclusion or facing hurdles sending stock prices (SPX)(DJIA) soaring or tumbling.
Anyone who has followed Jeffrey Gundlach, the chief executive of DoubleLine and the so-called bond king, knows he likes one market-based predictor for bonds.
The Federal Reserve left its policy rate unchanged at 1.5-1.75 per cent and indicated without dissent that it had no plans to make any more changes in 2020. After a two-day meeting in Washington on Wednesday, policymaker predictions for the likely future path of the Fed’s policy rate showed a decisive shift toward a more accommodative path over the next three years. In September, when the Fed last published its predictions, the median policy rate proposed for 2022 by participants in the Fed’s Open Market Committee was 2.4 per cent. That has dropped to 2.1 per cent.
U.S. Treasury yields bounce off their lows to end higher on Tuesday on expectations for a delay to tariffs on China, even as White House officials offering conflicting comments on the eventual outcome.
The decline in U.S. productivity was a bit less in the third quarter than previously reported, but it still marked the first negative reading since 2015. productivity fell 0.2%.
Speaker of the House Nancy Pelosi on Tuesday announced that Democrats would back the revamped U.S-Mexico-Canada trade pact negotiated by President Donald Trump. At a press conference, Pelosi said Democrats were able to wrest last-minute concessions on enforcement that make the USMCA palatable. Analysts said Pelosi will try to pass the deal before the holiday break. Pelosi said she worked closely with Richard Trumka, the president of the AFL-CIO trade union, during the final negotiations over the weekend.
U.S. and Chinese trade negotiators are "laying the groundwork" to delay new tariffs that were set to go into force on Dec. 15, according to The Wall Street Journal. Economists are worried about these new tariffs because they would hit U.S. consumers, who have been the bright spot in the economy. The report, which quotes unnamed officials on both sides, said the two countries are haggling over how to get China to commit to massive purchases of U.S. farm products.
Former Federal Reserve Chairman Paul A. Volcker, who died over the weekend at 92, was a towering figure both in stature (he was 6 foot, 7 inches tall) and in his role in American life: He broke the back of inflation for at least a generation, maybe two. A cottage industry of “Fed watchers” had to glean what the central bank was doing from what happened in money markets or, as I’ve liked to joke, by watching which way the ashes fell from Volcker’s signature cigars. When President Jimmy Carter appointed him in August 1979, the consumer-price index was rising at nearly a 12% annual clip.
U.S. Treasury yields fall slightly on Monday as traders stayed on the sidelines ahead of coming meetings by the Federal Reserve and the European Central Bank.
Paul Volcker, the former Federal Reserve chairman who had a second career pushing for reform on Wall Street, has died at 92, according to numerous reports. Volcker was a legendary Fed chairman at the central bank for his fight against inflation in the late 1970s and early 1980s. Volcker was praised for establishing the Fed's credibility to control inflation. After the 2008 financial crisis, Volcker pushed for reform. He said in his memoir published in the fall of 2018 that he was worried about the impact of money in the political system.
You might think the hard-money, recession-at-every-corner crowd would be predicting an imminent reversal in the stock market given the 20% gain for the Dow Jones Industrial Average this year. Not necessarily.
U.S. Treasury yields closed higher Friday after data from the Labor Department showed the U.S. created 266,000 new jobs in November, more than expected and the biggest monthly gain since January.
The economy produced a robust 266,000 new jobs in November and the unemployment rate returned to a 50-year low, reflecting the resilience of a rock-solid U.S. labor market.
(Bloomberg Opinion) -- One of the most popular talking points in markets lately has been that the U.S. jobs report, long seen as a crucial indicator of the broader health of the economy, is actually not as important as it’s made out to be. Instead, it’s all about inflation, or central banks providing liquidity, or the latest news about striking a trade deal.For one day at least, it was all about jobs data again for bond traders.In what could only be described as blockbuster numbers, payrolls surged by 266,000, the most since January and beating all estimates in a Bloomberg survey calling for a 180,000 gain, according to a Labor Department report Friday. On top of that, the prior month’s advance was revised upward by 28,000, to 156,000. Average hourly earnings rose 3.1% from a year ago, topping expectations for 3% growth. The unemployment rate dipped to 3.5%, rather than sticking at 3.6% as analysts anticipated. Benchmark 10-year Treasury yields soared almost 8 basis points in a flash, climbing to 1.86%, the highest since mid-November. It was the biggest instant reaction to payrolls data the market has experienced all year. The only somewhat comparable move was on July 5, when yields ended the trading session 10 basis points higher, after a relatively small increase at first. But even then, when job gains trounced estimates by 64,000, the previous month’s figures were revised lower, the unemployment rate unexpectedly increased and wage growth fell short. It wasn’t across-the-board strength like these November numbers.The data was so good, in fact, that futures traders have finally started to believe that the Federal Reserve will truly hold interest rates steady next year. Fed funds futures are now only pricing in 23 basis points of easing for all of 2020, or less than one typical quarter-point cut. These numbers should calm any fears of an impending recession, and with it another yield-curve inversion.Given that the hurdle for the central bank to raise interest rates again is so high, traders will probably hesitate to whittle those wagers down much further. But it should simplify Fed Chair Jerome Powell’s message to investors at his Dec. 11 press conference: Monetary policy is in a good place and the central bank will be patient from here to see if inflation picks up. And the economy? It’s definitely in a good place — the latest payrolls report proves it.To contact the author of this story: Brian Chappatta at firstname.lastname@example.orgTo contact the editor responsible for this story: Beth Williams at email@example.comThis column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Brian Chappatta is a Bloomberg Opinion columnist covering debt markets. He previously covered bonds for Bloomberg News. He is also a CFA charterholder.For more articles like this, please visit us at bloomberg.com/opinion©2019 Bloomberg L.P.