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The first of two key events affecting financial markets this week, this month’s Federal Open Market Committee (FOMC) meeting, has just concluded. On Friday, the Department of Labor will release its jobs report, containing data about new jobs added in April. Based on a survey by Reuters, economists expect the April count to include 175,000 added jobs.
According to statements released immediately following the conclusion of today’s meeting, the Federal Reserve voted unanimously to maintain its key interest rate, the Fed funds rate, which is currently fixed between 0.75 and 1.00%. The Fed sta
tement cited a sluggish economy which grew only 0.7% in the first quarter of 2017.
No Stealth Rate Hike
One topic devoid of any real details was balance sheet liquidation, the Fed’s plan to begin to liquidate some of its assets. This issue contains the greatest amount of uncertainty as such a move by the Fed would be the first ever occurrence, and as such, lacks any real quantifiable data to base analysis upon.
As reported by CNBC, “The FOMC did not address an issue of increasing concern in the market – its $4.5 trillion balance sheet on which it stores its bond portfolio. Fed officials have indicated that it will change its policy of reinvesting proceeds from its holdings, a move they say would be tantamount to a series of interest rate hikes. However, officials have not set forth a plan over how that will happen.”
Comment: Perhaps a clue ? Expect all HE** to break lose if/when the Fed announces the unwinding of their balance sheet. Is this the reason for the PM Bash?