monetary policy

“The formulation removes any possible ambiguity and resolutely conveys that 2% is not a ceiling”

The repo market has gathered significant attention recently after the Fed’s purchases hit a record of half a trillion dollars. But is a repo? And why does central bank action impact the market so much? Find out below.

Expectations are for the FOMC to continue to sing their same tune.

Despite a powerful winter storm forcing the Federal Reserve’s Washington DC offices to close, the central bank was still able to release the minutes from its late January meeting.

With seemingly every member of the Federal Reserve emphasizing that the central bank would be “patient” following its December interest rate hike, it came as no surprise that the Fed left interest rates unchanged today. And, despite the speculation that Chairman Powell and Company could revisit their balance sheet rundown strategy, the central bank was quiet on that front as well.

For more than a week, the US dollar has risen sharply as US government bond yields have surged – with the benchmark 10-year Treasury yield briefly topping 3% – while geopolitical risk perceptions have tentatively waned.

The past week has seen a sharp rise in US Treasury yields, which has helped to fuel a US dollar rebound as well as place renewed pressure on recently rallying equity markets.

The Federal Reserve, helmed for the first time by new Fed Chair Jerome Powell, concluded its two-day FOMC meeting on Wednesday, announcing a widely expected 25-basis-point interest rate hike to push the federal funds rate up to 1.50-1.75%.

The Federal Reserve’s two-day FOMC meeting concludes on Wednesday, and markets are heavily focused on Fed officials’ latest economic projections – more specifically, the outlook for future interest rates as represented by the Fed’s “dot plot.”

The past week saw market volatility stabilize from previous weeks as both the US dollar and equity markets sought direction amid continuing concerns over the potential for a global trade war.

If US and European markets have not had enough volatility to deal with this week amid the specter of possible trade wars stemming from US President Trump’s plans to impose hefty import tariffs and the European Union’s swift threats of retaliation, more potential volatility triggers are on the way.

On Wednesday, the last day of an atypically volatile February, stocks continued to struggle and fluctuate in the aftermath of a broad-based sell-off a day earlier that was driven by new Fed Chair Jerome Powell’s hawkish testimony in front of the US Congress’ House Financial Services Committee.

The US dollar was still seeking direction while equity markets bounced back on Friday after a week of persistently volatile trading, as interest rates and Federal Reserve speculation continued to dominate headlines.

Early next week features some key releases from Australia, including the minutes from the last Reserve Bank of Australia (RBA) monetary policy meeting in early February, and the quarterly Wage Price Index.

For the second day in a row, the heavily-battered US dollar index showed signs of rebounding and rallying from extreme lows early in the day, only to pare those gains and dip into negative territory further into the trading day.