Stock Market News

Starting June 1, the Fed began reducing its balance sheet holdings of U.S. Treasuries by $30 billion a month for three months. Thereafter, it will double its reduction of U.S. Treasuries by $60 billion per month beginning in the fourth month. For its mortgage-backed securities, the first three months will see $17.5 billion roll off its balance sheet. Starting in the fourth month of the program, this cap will increase to $35 billion per month. As its dual mandate is to both maintain employment and a stable rate of inflation, this is another way the Fed is implementing its monetary policy to put the brakesRead More →

The Bureau of Labor Statistic’s Consumer Price Index rose by 8.5 percent year-over-year ending March 2022, leading most economists to agree that inflation is going to be with us for a while. With inflation seeming not to abate, at least in the near term, how will different types of investments react to inflation that is sustained and unknown when it will peak and begin to drop. Looking at a 2004 study from the Federal Reserve, an unexpected 25-basis point rate cut can be expected to see equities appreciate by one percent. Defining Different Rates The Federal Open Market Committee (FOMC) sets the federal funds rateRead More →

According to the March 2022 Short-Term Energy Outlook (STEO) from the U.S. Energy Information Administration (EIA), the forecast is for high energy prices in 2022. The report found that Brent crude oil, used as a benchmark ex-U.S., is expected to see prices of $116 per barrel in Q2 of 2022. West Texas Intermediate (WTI), the price the U.S. uses as a benchmark, is expected to cost consumers, on average, $4.10 a gallon in Q2 of 2022. The World Economic Forum blames volatile oil and energy prices in general on demand outstripping supply. This is attributed to OPEC not expressing a sense of urgency to rampRead More →

There’s much uncertainty surrounding if, how and when the Federal Reserve will raise its rates, end its bond and mortgage-backed security purchases, and wind down its balance sheet. For the March 16 Fed Meeting, the CME FedWatch Tool has a 47.9 percent probability of a 25 to 50 basis point increase, and a 52.1 percent probability of a 50 to 75 basis point increase for their Target Rate. There are many expectations for the Fed to raise its Federal Funds rate, or the so-called overnight lending interbank rate. However, there’s a lot of uncertainty as to how many times the FOMC will increase it. JohnRead More →

According to the World Bank, there’s a mixed picture for commodities in 2022. Globally, prices for crude oil are expected to hit $74 per barrel during 2022, compared to 2021’s $70 price tag. This is attributed to greater economic activity as the world continues its reopening. Metal commodities, on the other hand, are projected to drop in 2022 by 5 percent. Similarly, the “softs,” or farming-based commodities, are expected to find an equilibrium or fall nominally in 2022. With much uncertainty related to the pricing of commodities and their impact on 2022’s markets, how have commodity prices impacted company profits and past market cycles? Earnings,Read More →

According to a Dec. 15 Federal Open Market Committee (FOMC) statement from the Federal Reserve, the federal funds target range will remain at 0 percent to 0.25 percent. Beginning in January, the FOMC will reduce its monthly purchase of assets to $40 billion in Treasury securities and $20 billion in mortgage-backed securities, with tapering expected to finish well before mid-2022. The FOMC also projects three rate hikes in 2022. These monetary policy adjustments are all subject to change based on the economic developments going forward, signifying uncertainty for markets in 2022. What History Says Looking back to the last “taper tantrum” in 2013 when BenRead More →

As the Board of Governors of the Federal Reserve System points out, Jerome Powell was appointed to a four-year term on Feb. 5, 2018. With the Fed Chair’s term expiring in February 2022, there has been much uncertainty as to whether he would be reappointed or replaced. Powell’s first term as the Chair of the Fed began in 2018, after being nominated by President Trump in November 2017. If reappointed, Powell will serve another four years, where he will guide the nation’s short-term monetary policy and become the Federal Open Markets Committee’s (FOMC) chair. During a Nov. 22 announcement, President Biden said that he’s renominatingRead More →

Energy is expected to increase in price as 2021 closes and 2022 begins, according to the Oct. 13, 2021 Short-Term Energy Outlook (STEO) from the U.S. Energy Information Administration (EIA). Between October 2021 and March 2022, the U.S. benchmark, Henry Hub, is expected to average $5.67 million British thermal units (MMBtu). For 2022, the average price is expected to be $4.01/MMBtu. This is attributed to increased consumer need, a decline in domestic natural gas production, and sub-par inventories stockpiled as the weather becomes increasingly cold. According to the EIA, the price of natural gas is influenced by a multitude of factors. These include supply andRead More →

According to the Sept. 8, 2021, release of the Federal Reserve’s Beige Book, the U.S. economy is facing many headwinds. The report found that restaurants and the travel sector saw a drop in activity. Home and auto sales were low because of fewer available houses on the market and a challenging supply of computer chips for auto makers. The same report found that although more people have found work, the level of newly created employment was mixed, despite a continuing need for more workers. Due to people quitting their jobs, people retiring, and those unable to find means of suitable childcare, the employment situation remainsRead More →