Federal Reservations

The Federal Reserve, Bank of Canada, Bank of England, the Bank of Japan, the European Central Bank, and Swiss National Bank announced coordinated actions to provide liquidity support to the global financial system. Today’s announcement involves a reduction in cost at which banks in foreign countries can borrow dollars from their central banks. The central banks lowered the price on the existing temporary U.S. dollar liquidity swap line by 50 basis points such that the new rate will be U.S. dollar over night indexed swap (OIS) rate plus 50 bps instead of U.S. dollar OIS rate plus 100 bps. In addition, the Bank of England, the Bank of Japan, the European Central Bank, and the Swiss National Bank will continue to offer three-month tenders until further notice. This arrangement will be effective as of December 5, 2011 and will remain in place until February 1, 2013.

Originally from The Market Oracle

Federal Reserve Chairman Ben Bernanke reiterated the central bank's commitment to providing stimulus for the wobbly US economy but offered no specific promises or details about what action could be taken.

Originally from All News, Video and Posts related to TOPIC: Federal Reserve

Just thinking out loud ...

Fed Chairman Ben Bernanke argued that the recent slowdown was mostly due to temporary factors. From the FOMC statement: "The slower pace of the recovery reflects in part factors that are likely to be temporary, including the damping effect of higher food and energy prices on consumer purchasing power and spending as well as supply chain disruptions associated with the tragic events in Japan."

I also think we will see some pickup in the 2nd half of 2011, although I think the recovery will remain sluggish and choppy.

There has been some progress on the supply chain issues, and oil and gasoline prices have fallen sharply since late April.

So when will we see some better economic news?

Clearly we will see some ugly reports over the next few weeks. The regional manufacturing surveys will probably all show contraction in June, and that means the ISM manufacturing survey will be pretty bad, and maybe below 50 - indicating contraction nationally (to be released Friday, July 1st).

The May Personal Income and Outlays (Monday, June 27th) will be weak (May was a tough month), and there is little indication that the June employment report will be strong (Friday July 8th).

However, the Pending Home sales index (Weds, June 29th) will probably show a decent rebound from April. And several house price indexes have shown a bounce in house prices in April including the FHFA index released today.

U.S. house prices rose 0.8 percent on a seasonally adjusted basis from March to April, according to the Federal Housing Finance Agency’s monthly House Price Index.

Of course the FHFA index is based on GSE houses only, and almost everyone follows the Case-Shiller index now (Tuesday June 28th).

Even though Case-Shiller is a three month average - and the April report is for February, March and April - it is likely that Case-Shiller will be less negative in April than the previous months, and maybe even slightly positive. Seasonally April is usually one of the worst months of the year for the Case-Shiller index, so a less negative reading would be viewed as a positive.

And auto sales (Friday, July 1st) will probably show a rebound in June after the sharp falloff in May. From the Detroit News: GM will have 'good' sales month in June, exec says

"GM is going to have a good month — and I will leave it at that ... I feel good about June, and Ford does, too," [General Motors North American President Mark] Reuss said.

Ford Americas President Mark Fields told reporters earlier this week that June is "off to a good start."

But for manufacturing in general it might be some time before we see some more positive reports - the earliest would be mid-July, but it might not be until August or later.

And although gasoline prices are falling, prices are still much higher than earlier this year - and still above the levels in March. Consumption was somewhat weak in March, and that was when we saw the sharp decline in consumer sentiment. So falling gasoline prices will help, but consumption will probably still be fairly weak.

Last year at this time I was looking for weaker reports, and this year I'm looking for slightly better reports. Of course, as I mentioned above, some of the ugly reports are still coming (ISM manufacturing, Q2 GDP, etc) - but I think we will see a little better news here and there. I'm just starting to figure out when (and if) we will see a little pickup.

Unfortunately, even if the news is a little better, the recovery will still be sluggish ... (and remember, I have no crystal ball).

Originally from Calculated Risk

A strong bout of data meant bond traders were on the defensive on Tuesday with yields also pivoting around the price of crude oil, which in New York is once again pressing on the triple-digit mark. Yields are generally firmer in response to a series of purchasing managers’ surveys indicative of yet healthy recovery. A jump in the price of oil mid-morning coupled with a calm tone from the Chairman of the Federal Reserve later helped improve the bid behind treasuries while equity prices responded … [visit site to read more] or compare Best Credit Cards and Best CD Rates

Originally from DailyMarkets.com

Federal Reserve Board Chairman Ben Bernanke stuck his neck out on Tuesday and said the increase in inflation from the spike in oil prices will be modest and temporary.

Originally from MarketWatch

WASHINGTON (MarketWatch) - Federal Reserve Board Chairman Ben Bernanke on Tuesday said the increase in inflation from the spike in oil prices will be modest and temporary. "The most likely outcome is that the recent rise in commodity prices will lead to, at most, a temporary and relatively modest increase in U.S. consumer price inflation," Bernanke said in prepared remarks to the Senate Banking Committee. He defended the Fed's $600 billion bond-buy program but gave no hints about what the central bank would do after the purchases ends, now expected on June 30.

Originally from MarketWatch

Federal Reserve Board Chairman Ben Bernanke stuck his neck out on Tuesday and said the increase in inflation from the spike in oil prices will be modest and temporary.

Originally from MarketWatch

2011 is set to be the year of the dollar’s rebound. At first glance, the dollar shouldn’t be on the rise. Official unemployment is stuck at near 10%. Dozens of municipal governments are set to fall into bankruptcy this year. The federal budget deficit is over $1 trillion. The Fed has signaled its intention to monetize more debt.

Originally from The Market Oracle

WASHINGTON (MarketWatch) -- There has been too much alarmist discussion of recent economic indicators and the outlook is not as pessimistic as some have suggested, said Dennis Lockhart, the president of the Atlanta Federal Reserve Bank on Friday. Lockhart said he thinks the U.S. economy is experiencing a "temporary downshift" and the economy will look and feel better at the end of the year than it does today. In a speech in East Tennessee State University, Lockhart said the Fed's decision last month to buy Treasurys to maintain a stable balance sheet had been "over-interpreted." He said it did not herald the start of new quantitative easing. Lockhart said the August nonfarm payroll report did not change the picture in the labor market of continued high unemployment. Consumers are holding back from spending because of labor market conditions, he said.

Originally from MarketWatch