January 9-13 outlook for rates, stocks, economic data, Europe

Rates started the day up, but have since dropped. Here’s why.

Remember this time last year when rates were dropping as Europe’s debt crisis was spiraling and the chatter about QE2 was reaching fever pitch? What happened then was that NY Fed president Bill Dudley gave a speech on October 1 that confirmed QE2 and rates hit record lows a week later, then went up a [...]

Below is the full FOMC statement from today’s Fed meeting, and there are three dissenters on today’s new language stating a low rate target “at least through mid-2013″. These dissents are a big change because all FOMC decisions received unanimous votes since the Thomas Hoenig rotated off the FOMC in January, and he was the [...]

Rates were dropping this time last year as Europe’s debt crisis and U.S. economic weakness led to a second round of quantitative easing. NY Fed president Bill Dudley confirmed QE2 in an October 1, 2010 speech, and rates hit an all-time record low October 9. Market theory during the debt ceiling debate was that, once [...]

For the past 2.5 years, the Fed has run two rounds of rate stimulus known as quantitative easing (QE), which is bond buying to drive prices up and rates down. QE2 ends June 30, so here’s a chart recapping 30yr fixed rates from crisis peak to now. It’s labeled to show how QE1, QE2, and [...]

On this April Fool’s Day, the only fools are those who bet on a worse jobs report. Stocks are up (S&P +11, Dow +92) and bonds are slightly down (10yr Note -16 bps, FNMA 30yr 4% coupon -9 bps) after the Bureau of Labor Statistics showed that non-farm payrolls rose 216k in March and the [...]

Today’s Fed statement acknowledges economic recovery is on “firmer footing,” and while the Fed acknowledges inflationary concerns, it’s choosing to ignore inflation pressure for now and keeping overnight bank-to-bank target Fed Funds Rates at 0-.25%, and keeping the overnight Fed-to-bank Discount Rates at .75%. They also said they’d keep going with their second round of [...]

Below is the statement from the first Fed rate policy of 2011, which shows their view that the economic recovery and jobs situation is still unstable. They left overnight bank to bank lending rates the same at a 0-.25% target, and also said they’d continue their $600b quantitative easing program designed to lower business rates [...]

Following the last Fed policy statement of 2010 (below), rates continue higher—30yr fixed 5% today vs. 4% on October 8—as mortgage and Treasury bond prices continue to trade lower on the 4 rate themes of recent weeks. The Fed noted that “the economic recovery is continuing” and that they’d continue the $600b+ Treasury buying (QE2) [...]