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Federal Reserve Leaves Rates Unchanged

Bloomberg Television・162 minutes read

Ancestors have practiced music for centuries. Bloomberg covers market-moving names and changes in the labor and energy markets.

Insights

Ancestors have practiced music for centuries.
Bloomberg provides comprehensive business coverage globally.
The Federal Reserve leaves rates unchanged at 5.25 to 5.5%, citing solid growth and elevated inflation.
The FED projects a 2.1% growth for this year, up from 1%, and 1.5% growth next year, up from 1.1%.
The Fed aims to restore price stability to benefit all, especially those on fixed incomes who are most affected by inflation.

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Recent questions

What does the Federal Reserve aim to achieve?
Economic stability through rate adjustments.
Who provides comprehensive global business coverage?
Bloomberg
What is the Federal Reserve's current interest rate?
Unchanged at 5.25 to 5.5%
Who are some experts discussing the Federal Reserve's future actions?
Kathy Jones, Matt Lazetti, and Jim Karen
What are some potential risks to the economy?
Government shutdown, student loan repayments, oil price shocks

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Summary

00:00

"Global Business Updates and Market Analysis"

Ancestors have practiced music for centuries.
Bloomberg covers market-moving names and changes in the labor and energy markets.
Over-tightening is cautioned against, with a focus on course correction.
Pressure increase is debated, with a need for continuous good news.
Bloomberg provides comprehensive business coverage globally.
Wall Street and Europe trading updates are provided by Manas Granny and Danny Berger.
Risk analysis and informed trading decisions are emphasized.
The FED decision countdown is highlighted, with market updates and forecasts.
Various experts discuss the FED's future actions and economic projections.
The FED aims to control inflation and maintain economic stability through rate adjustments.

15:26

Fed's Future Actions and Market Uncertainty

Decision to be reserved for September, approximately 15 minutes away, with current equity market status: S&P 500 nearly unchanged, up by 0.1%, NASDAQ down by 0.14%.
Bond market reflecting high rates, with the two-year yield above 5% and the 10-year in the 430s, 30-year around 440 basis points.
Dollar strength observed due to elevated front-end bond yields, Euro holding at around 1.0726 against the dollar.
Discussion with experts including Kathy Jones, Matt Lazetti, and Jim Karen on real yields, Fed policy tightening, and potential rate hikes.
Uncertainty regarding Fed's future actions, with focus on 2026 projections and potential GDP growth.
Fed's view on inflation, interest rates, and potential rate hikes, with emphasis on achieving a sufficiently restrictive stance.
Expectations for Fed's growth and inflation projections to be revised slightly, with a focus on 2024 forecasts.
Consideration of potential mild recession, impact on markets, and Fed's inflation targeting strategies.
Upside risks in the market, including potential for quick recovery post-recession and opportunities for investors.
Client concerns regarding market entry points, duration extension, and yield locking strategies.

28:49

Fed Holds Rates, Projects Growth and Inflation

The Eccles building is data-dependent, considering global factors like China, as per Neil Johnson from Isis Macro.
The Federal Reserve leaves rates unchanged at 5.25 to 5.5%, citing solid growth and elevated inflation.
The Dot Plot indicates 12 members foresee a 25 basis point rate hike this year, with a high dot at 6.25%.
The Fed projects a 2.1% growth for this year, up from 1%, and 1.5% growth next year, up from 1.1%.
Unemployment is expected to drop to 3.8% this year and 4.1% in the next two years.
PCE headline inflation is forecasted at 3.3% this year, with core PCE falling to 3.7% next year and 2.6% in the following year.
No changes in QT or IOR/Repo rates are mentioned.
The S&P 500 is down by 0.2%, while the NASDAQ remains almost unchanged post-Fed decision.
Yields on a two-year bond in America are around 5.05%.
The US dollar strengthens post-decision, with the Euro at 106.89 against the dollar.

43:30

Federal Reserve's Forecast: Growth, Inflation, Uncertainties

Higher yield levels were sustained, potentially leading to restrictive levels in the future.
The Federal Reserve's optimism about growth for next year was questioned due to various headwinds like higher oil prices and student loan repayments.
The Federal Reserve's decision remained unchanged, with a significant upgrade to GDP projections for this year and next.
Projections indicated a potential increase in interest rates in the coming years, with a focus on achieving a soft landing.
The Federal Reserve's forecast aimed to return to target inflation levels and maintain low unemployment rates.
The Federal Reserve's outlook was viewed as aspirational, with uncertainties still present in the economic landscape.
Concerns were raised about the Federal Reserve potentially missing disinflationary tendencies and the importance of plain vanilla inflation.
The Federal Reserve's forecast was critiqued for potentially overlooking significant changes in the economy post-2020.
The importance of data-driven decision-making in response to the Federal Reserve's forecasts was emphasized.
The bond market was viewed as not offering significant capital appreciation opportunities, with a focus on roll and carry strategies instead.

57:36

Federal Reserve signals stable rates, inflation challenges ahead.

The Federal Reserve has indicated that interest rates will remain stable for a while, prompting a cautious approach.
Jim Bianco and Greg Peters have been at the forefront of defining longer-term yield trends.
The Federal Reserve's news conference with Chairman Powell is imminent, with the two-year yield currently at 5.14%.
The Follies began in August 2007, with a headline indicating a two-year yield back to 2006 levels.
Chairman Powell emphasizes the Fed's commitment to promoting employment and stable prices, acknowledging the challenges posed by high inflation.
The FOMC has tightened monetary policy significantly since last year, with a focus on reducing Securities Holdings.
Economic indicators suggest solid growth, with consumer spending robust but business fixed investment impacted by higher interest rates.
Labor market conditions are improving, with job gains averaging 150,000 per month, though inflation remains above the 2% goal.
The FOMC projects a gradual decline in inflation, aiming for 2% by 2026, with a focus on balancing economic activity and inflation risks.
The committee maintains a restrictive monetary policy stance, with plans to carefully assess data for further policy firming to achieve long-term goals.

01:13:31

Fed monitors data for rate decisions and inflation.

The Federal Reserve is carefully assessing incoming data and evolving risks to make decisions meeting by meeting.
The impact of one more interest rate hike at the end of the year on the economy or inflation is uncertain.
The Fed aims to reach a policy stance that brings inflation down to two percent over time.
Stronger economic activity may necessitate more rate adjustments.
The neutral rate may be higher than the longer run rate, affecting economic resilience.
The economy needs below-trend growth to achieve consistent two percent inflation.
The labor market is rebalancing without increased unemployment, indicating progress.
A soft landing is a plausible outcome, but not a baseline expectation.
The Fed focuses on real rates and needs compelling evidence to normalize policy stance.
GDP growth driven by consumer spending is being closely monitored for its impact on inflation.

01:28:15

Economic Risks and Uncertainty in Forecasting

The list of potential economic risks includes a government shutdown, resumption of student loan payments, higher long-term rates, and oil price shocks.
Uncertainty surrounds the economic effects of a potential strike, with potential impacts on economic output, hiring, and inflation depending on its breadth and duration.
Energy prices, if sustained at higher levels, can affect consumer spending and expectations about inflation, influencing macroeconomic effects.
The Federal Reserve aims to achieve a soft landing in the economy to restore price stability and avoid prolonged periods of uncertainty and inflation.
Forecasting economic trends is challenging, with recent stronger growth leading to higher rates and lower unemployment forecasts.
Inflation trends are influenced by the unwinding of pandemic-related supply chain disruptions and monetary policy measures aligning supply with demand.
The Fed's cautious approach to rate increases considers the need to carefully balance the risks of overtightening or undertightening as they aim to bring inflation down to two percent.
Base effects and monthly inflation readings guide the Fed's assessment of inflation trends, with a focus on longer-term data to avoid misleading short-term volatility.
Energy price increases can impact consumer spending and sentiment, with the Fed monitoring the effects on inflation and consumer expectations.
Consumer credit levels are being closely watched, with measures of consumer distress returning to pre-pandemic levels but not yet at concerning highs.

01:43:29

Impact of Historic Lows on Interest Rates

Recent historic lows will impact future interest rate decisions, particularly in relation to supply and house prices.
Inflation is affected by expiring leases, leading to a decrease in Housing Services inflation as leases are renewed at lower rates.
Lock-ins on low mortgage rates may stagnate the housing market, making it difficult for individuals to move due to higher new mortgage costs.
Consumer confidence may be impacted by factors like possible government shutdowns and high gas prices, potentially affecting consumer spending and inflation.
The FED aims to restore price stability to benefit all, especially those on fixed incomes who are most affected by inflation.
The economy's resilience may be due to strong household and business balance sheets, leading to sustained spending despite interest rate hikes.
The FED is considering the efficacy of interest rates and their impact on different income groups, with lower-income individuals facing challenges with rising rates.
The FED surveys low-income Americans to assess economic health, noting that government transfers during the pandemic improved financial conditions for many.
The FED projects one more rate hike this year, with revised GDP forecasts and lower inflation expectations, aiming for a soft landing in the economy.
Market reactions post-FED meeting show increased two-year yields and a stronger Bloomberg dollar index, indicating market belief in higher rates and a longer-term trend.

01:58:03

Fed Holds Rates, Signals Hawkish Pause Ahead

The stock market is down one percent, with New York's X down 1.3 percent, reflecting a hawkish pause for a longer period.
The Federal Reserve, led by Jay Powell, decided to hold rates based on progress made since the July hike.
Real interest rates are above mainstream estimates, but uncertainties exist in gauging policy stance.
The Fed is prepared to raise rates further if needed and will maintain a restrictive policy until confident about inflation.
Bill Dudley highlighted five key aspects to watch in the Fed's forecast, including rate hikes, unemployment outlook, and neutral funds rate.
Dudley noted a potential soft landing due to a stronger economy and increased estimates of the long-term Federal fund rate.
The market's reaction to the Fed's decision was mixed, with bond yields up and stock prices affected.
Keeping a rate hike in the forecast may restrain markets from assuming the Fed is done, preventing unwanted easing in financial conditions.
The Fed's decision signals rates will stay elevated for 9-12 months, impacting consumers and firms with higher cost of capital.
The Fed aims for a soft landing in both inflation and the labor market, with projections aligning with expectations for gradual economic slowdown.

02:10:54

"Market anticipates Fed rate hikes, inflation impact"

Companies are experiencing rising default rates, especially for lower-rated credits with higher leverage and lower interest coverage ratios.
The S&P 500 has seen a 4% increase since the Federal Reserve began raising interest rates in March 2022, with a 23% increase from its low in October of the previous year.
Historically, the stock market tends to remain stable on Fed days, but there have been 101 trading days without a decline of at least 1.5%, the longest streak since 2018.
Federal Reserve Chairman Jerome Powell emphasized the importance of real yields being positive and needing to remain so for some time.
The market expects the Fed to maintain policy rates above inflation for the next few years, despite potential fluctuations in real rates.
The delay in monetary policy effectiveness is attributed to the long-term debt structuring by households and businesses since the late 1990s.
The market anticipates a potential unwinding of bets on interest rate cuts following the Fed's projections, leading to a shift in two-year yields.
Expectations for inflation and Fed rate hikes have evolved, with higher inflation potentially driving a further increase in long-term rates.
The Fed's policy flexibility aims to balance between being sufficiently restrictive to control inflation while avoiding being overly restrictive.
Consensus forecasts suggest a soft landing for inflation, but the market remains cautious about potential surprises in inflation trends.

02:24:03

Federal Reserve holds rates, economy's impact analyzed.

The story focuses on the Federal Reserve's decision to hold rates at the September meeting and the expectation of higher rates into 2024.
The strength of the economy will determine if there will be further rate hikes beyond the current cycle.
Real rates and inflation are key factors in the Fed's decision-making process.
The discussion on real rates highlights the uncertainty surrounding the economy's resilience and the impact on inflation.
The Fed's path forward is described as complex and uncertain, with challenges in forecasting beyond the current year.
The market reaction to the Fed's decision includes shifts in bond yields and stock performances.
Clavio's IPO and stock movements of companies like Pinterest and Enphase Energy are discussed.
Stocks like Apple, Microsoft, and Zebra Technologies experienced declines based on market reactions.
FedEx's earnings report showcases a focus on cost-cutting and revenue quality, with concerns about long-term sustainability.
The Fed's awareness of business stresses and the need for a strategic approach to economic challenges are highlighted.

02:36:37

FedEx shares rise on cost-cutting measures

FedEx shares rose by two and a half percent after hours.
The increase in shares is attributed to cost-cutting measures rather than growth.
FedEx plans to buy back an additional $1.5 billion in shares during fiscal 2024.
Companies often buy back shares to utilize excess cash and buy time for recovery.
Despite muted demand post-rate hikes, the economy is holding up better than expected.
Cost-cutting alone may not strengthen a company, but it can please investors temporarily.
The EU's regulations influence global companies to adhere to European standards.
Standardization benefits companies by streamlining production and conduct globally.
The Fed's balance sheet reduction impacts the repo market, causing volatility.

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