Federal Reserve

Wall St may get greater of two bank capital evils

5 Apr 2021

Financial firms just lost a regulatory perk that had allowed them to guzzle Treasuries with abandon. They may yet get a reprieve since looser leverage limits help the central bank too. But if the Fed tightens other capital rules instead, lenders could be even worse off.

Powell’s inequality goals put him over his skis

17 Mar 2021

The Fed boss wants to close the racial employment gap that widened as a result of the pandemic. But helpful policies are outside of Powell’s mandate, and stimulus might actually exacerbate the problem. The consequence is the economy could overheat before the gap closes.

Chancellor: A bear market in bonds is beckoning

2 Mar 2021

Bond bull runs tend to last for decades, making it nearly impossible to accurately predict a turning point. But recent fixed-income extremes, together with the complacent attitude of central bankers and investors, suggest history’s greatest bond boom has passed its sell-by date.

Central banks will have to fight reflation tantrum

26 Feb 2021

Improving economic prospects have boosted bond yields. Fed boss Jerome Powell and his global peers will welcome the cause but not the effect. If their rhetoric can’t halt the sharp rise in borrowing costs, they will be forced to ramp up asset purchases to safeguard the recovery.

Bank buybacks are a Fed gift nobody needs

21 Dec 2020

The central bank will let lenders resume some stock repurchases, but with limits on how much. It’s no great sacrifice: buybacks are good for earnings per share, but they don’t obviously create value. And it’s not like investors can obviously spend the money better themselves.

Corona Capital: New York City, Fed/climate change

15 Dec 2020

Concise views on the pandemic’s corporate and financial fallout: New York City’s exodus puts local government in a tight spot; the Fed’s belated move shows a change in Washington.

Fed avoids dent to its chain mail of independence

2 Dec 2020

The U.S. Senate passed over Judy Shelton’s nomination to the central bank’s board. A few Republicans joined Democrats in questioning her partisanship. The Fed would benefit from more diverse voices. But she was a bad fit for an institution already under political pressure.

Fed chief makes case for non-partisan high ground

1 Dec 2020

Jay Powell testified in the Senate with Treasury Secretary Steven Mnuchin. Lawmakers from both parties tried to pull him into their battles but he stuck to his script. Mnuchin played nice too. Detaching monetary policy from politics is an increasingly fraught but worthwhile task.

Janet Yellen will bring back benign dollar neglect

30 Nov 2020

President-elect Joe Biden’s Treasury secretary pick is going to have less sway over the currency than she did as Fed boss. Yellen is likely to stick to bland mantras and focus on getting fiscal policy right. That will be a welcome change from the tack taken under Donald Trump.

Yellen may be bolder Treasury pick than she looks

23 Nov 2020

If nominated by Joe Biden, the former Fed chair would be only the second U.S. central bank chief to take the top fiscal post. Her resume makes her a safe choice, but Yellen’s evolution on subjects like fiscal deficits and unemployment could make her more daring.

Mnuchin and Powell create dangerous guessing game

20 Nov 2020

The U.S. Treasury secretary and Fed chief’s spat over unused bailout funds is a Rorschach test. Fiscal hawks may see an attempt to coax Congress into spending elsewhere. Others may see a petty gesture by an outgoing administration. The uncertainty is what poses the greatest risk.

Lael Brainard could be Goldilocks Treasury chief

17 Nov 2020

The Fed governor’s left-friendly views are in plain sight – she has stressed inclusion and climate risks. Just as important are her pragmatism, crisis experience and ability to get tough tasks done. Those qualities ought to appeal to lawmakers, whichever their side of the aisle.

Republicans try packing the Fed before Trump exits

13 Nov 2020

The U.S. Senate will vote on Judy Shelton’s nomination to the central bank’s board. She was in limbo partly due to fringe ideas, like a return to the gold standard, and has shown her partisan colors. Installing her before the White House changes hands is bad monetary policy.

Fed is only half way to climate-change conversion

10 Nov 2020

The U.S. central bank finally acknowledged that a warming planet poses real risks to the financial system. The Damascene moment is late but sets the scene for more concrete action now that the politics looks more favorable. And at least the Fed will have a late-mover advantage.

Viewsroom: What Biden bodes for money and markets

7 Nov 2020

Without a clear Senate majority, the former vice president will need to tack to the center when he occupies the White House. For Wall Street that’s a bullet dodged. For other industries, it’s a mixed bag. For multilateral institutions, it’s an improvement from Donald Trump.

Powell is Fed boss any U.S. president would keep

4 Nov 2020

The central bank chair will keep monetary policy easy and could get a second term from either Donald Trump or Joe Biden. He’ll have to live with heavy spending and borrowing either way. If the Democrat wins, there is one area that will be a better fit: a focus on racial equity.

The Biden portfolio is mainly the Trump portfolio

29 Oct 2020

It might matter for mini sectors, like solar power and cannabis, who wins next week’s U.S. presidential election. But as Trump’s impact on coal shows, it’s not that predictable. Instead the Fed, stimulus, taxes and the post-Covid economy are cause for an asset-allocation rethink.

Corona Capital: Fiscal stimulus, Fitness riches

6 Oct 2020

Concise views on the pandemic’s corporate and financial fallout: Central bankers including the Federal Reserve’s Jerome Powell urge more fiscal help as Covid-19 cases rise again; and the owner of NordicTrack treadmills raises cash at a $7 billion-plus valuation.

Markets lose virus immunity with Trump diagnosis

2 Oct 2020

The U.S. president said he tested positive for Covid-19. How this will affect the outcome of the election is unknown. Ditto whether it spreads further through Trump’s cabinet. The Fed has helped prop up markets so far. Investors are on their own in this uncharted territory.

The Exchange: Inflation nation

22 Sep 2020

The Fed’s new rate-setting philosophy is a game-changer, and hawks have become an endangered species in D.C. So argues David Kelly, chief global strategist at JPMorgan Asset Management. The central bank may boost inflation, he suggests – but its blunt tools could cause damage.