The Labor Market Conditions Index: Use With Care

I was curious to see how the press would report on the Federal Reserve Board’s new Labor Market Conditions Index.  My prior was that the reporting should be confusing at best.  My favorite so far is from Reuters, via the WSJ: Fed Chairwoman Janet Yellen has cited the new index as a broader gauge of employment conditions than the unemployment […]

Fed Watch: Forward Guidance Heading for a Change

The lackluster August employment report clearly defied expectations (including my own) for a strong number to round out the generally positive pattern of recent data.  That said, one number does not make a trend, and the monthly change in nonfarm payrolls is notoriously volatile.  The underlying pattern of improvement remains in tact, and thus the […]

Fed Hawks Squawk

How much leeway does Fed Chair Janet Yellen have in her campaign to hold interest rates low for a considerable period after asset purchases end later this year?  If you listen to Fed hawks, you would believe that she is quickly running out of room.  Dallas Federal Reserve President Richard Fisher argued that the liftoff […]

Fed Watch: On That ECI Number

The employment cost index is bearing the blame for the market’s July 31 sell-off. Sam Ro at Business Insider reports: …traders agree that today’s sell-off is probably due to one stat: the 0.7% jump in the employment cost index (ECI) in the second quarter. This number, which crossed at 8:30 a.m. ET, was a bit higher […]

Fed Watch: QEInfinity Not

The Federal Reserve released the minutes of the June FOMC meeting today, but the contents had little in the way of groundbreaking news.  Most interesting was that Fed officials tired of being pestered about the “October or December” question regarding the end of the QE and decided to more or less commit to the earlier date: Some […]

Fed Watch: Inflation Hysteria

It appears that a case of inflation hysteria is gripping Wall Street. Joe Weisenthal at Business Insidersums up the current state of play: Here’s what’s on Wall Street’s mind right now: Inflation is finally happening, and the Fed will end up being behind the curve. …there were two big moments this week. 1) There was the […]

Fed Watch: FOMC Preview

The FOMC is set this week to cut another $10 billion from its asset purchase program.  The statement itself will most likely point toward additional confidence that the first quarter slowdown was an aberration, and may even point to signs that inflation has bottomed and is headed higher.  Both will give the Federal Reserve more […]

Fed Watch: Policy-Induced Mediocrity?

Why did the Federal Reserve lean against their optimistic 2014 forecast?  It seems that monetary policy over the past year can be summarized as a missed opportunity to supercharge the recovery, thereby locking the US economy into a suboptimal growth path. Last week’s speech by New York Federal Reserve President William Dudley noted the reasons […]

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