Federal Reserve

U.S. bond yields turn from green light to red

4 Dec 2018

Treasury yields plunged to a three-month low on Tuesday and flashed a potential recession signal. While easy rates have supported the economy and stock market during the recovery, the latest moves suggest troubling weakness. They also raise the risk of a Fed policy mistake.

Review: Paul Volcker’s exemplary life

30 Nov 2018

The former Fed chairman is famous for crushing inflation. His new memoir, “Keeping At It”, reveals the attributes that made him arguably America’s greatest central banker. His common sense, distrust of economic theory and personal integrity are valuable guides to his successors.

Fed’s stability checkup downplays wobbly features

28 Nov 2018

Chairman Jerome Powell says the financial system is in good health, echoing a report from the U.S. central bank. The jobless rate is low while inflation remains in check. But risks like trade fights and corporate debt only get brief mentions. Watchdogs may regret that posture.

New global bank cop faces political stress test

26 Nov 2018

Fed Vice Chair Randal Quarles is a strong choice to lead the Financial Stability Board but the Basel-based body faces many challenges. A divided U.S. Congress is fighting about whether to be tough or soft on Wall Street. Brexit and other forces will also test cross-border unity.

U.S. stress tests risk falling on slippery slope

9 Nov 2018

Fed supervision chief Randal Quarles wants to tweak the annual exams. Some revisions are warranted, like giving banks test results before they decide how much capital to return to investors. But scrapping the watchdog’s ability to fail a firm gives Wall Street too much leeway.

U.S. regional banks finally feel watchdog warmth

31 Oct 2018

The Federal Reserve wants to modestly loosen liquidity rules for commercial banks like U.S. Bancorp and PNC. That will leave the United States’ biggest global lenders – the likes of JPMorgan and BofA – the only ones stuck with a largely undiluted post-crisis Dodd-Frank regime.

U.S. Treasury hasn’t yet been Trumped

17 Oct 2018

China again escaped being named a currency manipulator by the U.S. agency, despite pressure from the president. Although some trade-related penalties are already happening through other means, it’s a rational decision. Steady hands at Treasury and the Fed offer investors comfort.

Indebted consumers save Wall Street’s bacon

12 Oct 2018

JPMorgan and Citi beat earnings estimates, partly helped by consumers showing no strain from their record levels of personal debt. Tax cuts and rising wages mean this can continue for a while. Lumpy investment-banking revenue gives banks a reason to hope it does.

Markets are finally getting back to basics

11 Oct 2018

A slump in stocks slowed on Thursday, partly thanks to tame U.S. inflation data. American equity valuations are high, trade tensions and interest rates are rising, and earnings season is under way. Six months of steady tech-led gains may be giving way to the facts on the ground.

The Exchange: Jeff Lacker

9 Oct 2018

The presidency of the Richmond Fed, whose territory included two top U.S. banks, offered a unique window on the financial crisis. Wachovia needed rescuing and BofA’s deal to buy Merrill Lynch nearly collapsed. Lacker reflects on what went down and where finance is headed.

The Exchange: Neel Kashkari

4 Oct 2018

Even before Lehman Brothers went belly-up, the U.S. Treasury was hatching a contingency plan. Kashkari was one of the architects of the Troubled Asset Relief Program, which plugged some $250 bln into banks. He joins Rob Cox from his current perch running the Minneapolis Fed.

Hawkish Fed competes with trade as investor risk

26 Sep 2018

The U.S. central bank raised rates for the third time this year and will probably do so again in December. Meanwhile, its balance sheet is shrinking as Uncle Sam issues more debt. U.S. duties on $200 bln in Chinese goods also just hit. The confluence could upset markets.

Donald Trump makes Fed great again

20 Sep 2018

The U.S. president chose economist Nellie Liang to be a central bank governor. It will be the first time in five years that all seven board seats are filled. Liang’s financial stability expertise rounds out Trump’s other conventional picks and is going to be handy if crisis hits.

Chancellor: The carry trade that followed Lehman

14 Sep 2018

The subprime crisis was born from yield-chasing in the Greenspan easy-money era. Even lower interest rates since the Lehman bust revived the global carry trade. Another maelstrom will be hard to avoid.

Chancellor: “Haves” enriched most from Lehman bust

13 Sep 2018

Ultralow interest rates after the crisis may have lifted many boats, but the yachts of the wealthiest have been buoyed above all. Wall Street and the CEO class particularly benefited. This has come at the expense of the less fortunate, who are making their displeasure known.

Chancellor: The legacy of ultralow interest rates

10 Sep 2018

This first in a series of "Ten Years After" essays argues the bold monetary experiment that followed Lehman’s demise unleashed speculative manias, carry trades, populism born of inequality, capital misallocation and a China bubble that pose grave threats to the financial system.

As Trump goes low, Fed goes high

24 Aug 2018

Jerome Powell sees little risk of economic overheating, indicating the Fed will raise rates again next month. The U.S. central bank chief’s first public comments since the U.S. president said he wasn’t thrilled with Powell’s policies suggest he’s largely impervious to Trump.

Fed vice chair deserves to be top global bank cop

23 Aug 2018

Allies of President Donald Trump have slammed the Financial Stability Board, but Randal Quarles is a strong supporter. Putting the U.S. central banker in charge of the body that oversees financial regulation when Mark Carney steps down would help maintain global rules.

Summer lulls offer false sense of security

10 Aug 2018

That, at least, is the lesson of August 2008. A complacent Citi exec claimed the lender had more than enough capital, Merrill handed one banker a $40 mln guarantee, GM’s CEO was talking up its prospects - and the Fed was worried about inflation. The hubris didn’t last long.

Powell is ideal Fed chief for Trumpian times

20 Jul 2018

The U.S. president’s criticism of interest-rate hikes is a challenge to the Federal Reserve’s independence - but it shouldn’t trouble investors. Chair Jerome Powell is politically savvy and has earned bipartisan praise. Not being an econo-wonk like his predecessor probably helps.