MARKET UPDATE

Investment Strategies

Bond Markets & Research


Market Update -- Federal Open Market Committee

January 27, 2010

Meeting Date Policy Action Fed Funds Target
01/27/10 No change 0–0.25%
Notes Noted strengthening economy but voiced concerns about no hiring and other constraints to consumption. Noted better inventory levels and stronger capex ex structures. Noted supportive financial conditions outside bank lending. Noted subdued inflation trend. Kept "extended period" language and plans to terminate lidquidity and asset purchase programs. Vote 9-1.
12/16/09 No change 0–0.25%
Notes Noted rising level of economic activity, particularly in housing, and less labor market deterioration amidst more supportive financial conditions. Noted moderate consumption but listed numerous constraints. Noted business cutbacks are less pronounced. Inflation to remain subdued. Exceptionally low funds rate for an extended period anticipated. Asset purchases to conclude by end of Q1, while most liquidity facilities will expire Feb 1. Vote 10-0.
11/04/09 No change 0–0.25%
Notes Noted rising level of economic activity, housing in particular, amidst stable financial conditions. Noted stronger consumption but listed numerous constraints. Noted businesses are cutting back at a slower pace. Inflation to remain subdued. Will employ a wide range of tools, including exceptionally low funds rate for an extended period. Reduced size of agency purchase program by $25 BN but maintained MBS program. Monitoring size /composition of balance sheet. Will adjust as warranted. Vote 10-0.
09/23/09 No change 0–0.25%
Notes Noted rising level of economic activity amidst improved financial conditions. Noted stabilized consumption but listed numerous constraints. Businesses cutting back but under less stress. Inflation to remain subdued. Will employ a wide range of tools, including exceptionally low funds rate for an extended period. Maintaining size of bond purchase program but extending timing and slowing pace. Monitoring size/composition of balance sheet. Will adjust as warranted. Vote 10-0.
08/12/09 No change 0–0.25%
Notes Noted leveling economic activity amidst improved financial conditions. Noted more stable consumption but listed numerous constraints. Businesses cutting back but under less stress. Inflation to remain subdued. Will employ all tools, including a low funds rate, for an extended period. Maintaining size of bond purchase program, but will slow pace of Treasury buying. Monitoring size and composition of balance sheet. Will adjust as warranted. Vote 10-0.
06/24/09 No change 0–0.25%
Notes Noted better economic outlook but warned that weakess should persist for a time before gradually resuming a sustainable pace. Expects subdued inflaiton. Sees risk of less-than-desired inflation. Will employ all tools, including keeping a low funds rate for an extended period. Evaluating bond purchase program and size and composition of balance sheet. Vote 10-0.
04/29/09 No change 0–0.25%
Notes Noted better economic outlook but warned that weakess should persist for a time before gradually resuming a sustainable pace. Expects subdued inflaiton. Sees risk of less-than-desired inflation. Will employ all tools, including keeping a low funds rate for an extended period. Evaluating bond purchase program and size and composition of balance sheet. Vote 10-0.
03/18/09 No change 0–0.25%
Notes Noted weak economic outlook and downside inflation risks. Will keep exceptionally low funds rate for extended period. Will employ all available tools to promote recovery & price stability. Will purchase up to an additional $750B in MBS & $100B in Agencies this year, and buy up to $300B in Treasuries over next 6 months. Expect to expand TALF. Vote 11-0.
01/28/09 No change 0–0.25%
Notes Continue to expect exceptionally low rates. Noted further economic weakness & downside risks, but expects gradual recovery to start in 2009. Expects subdued inflation and sees risk of deflation. Will employ all available tools to lift economy and support markets. Vote 8-1 w/ Lacker against.
12/16/08 Decrease 75–100 bps 0–0.25%
Notes Established range with expectation that low levels will persist. Referenced deteriorating economic outlook and moderating inflation. Focused on supporting financial markets and stimulating economy. Listed actions and pledged to employ all available tools. Vote 10-0.
10/29/08 Decrease 50 bps 1.00%
Notes Expects slower activity from already low levels due to intensification of financial crisis/credit crunch. Inflation to moderate w/ no mention of upside risks. Fed actions so far to promote moderate growth but noted downside risks. Pledged to act as needed. Vote 10-0.
10/08/08 Decrease 50 bps 1.50%
Notes Coordinated, global cut between meetings in response to markedly weaker economic activity and a reduction in inflationary pressures. Intensification of financial market turmoil expected to exert additional restraint on activity. Pledged to act as needed. Unanimous approval.
09/16/08 No change 2.00%
Notes Noted weakening GDP and job market plus strained financial markets. Warned tight credit, housing contraction and slower exports will weigh on activity. High inflation expected to moderate but outlook very uncertain. Fed actions so far should promote moderate growth. Will act as needed.
08/05/08 No change 2.00%
Notes Noted expanding GDP but warned tight credit, housing contraction, and energy prices will weigh on activity. Inflation expected to moderate but outlook highly uncertain. Fed actions so far should promote moderate growth. Will act as needed. Vote 10-1.
06/25/08 No change 2.00%
Notes Noted expanding GDP but warned tight credit, housing contraction, and energy prices to slow pace. Inflation expected to moderate but uncertain and upside risks have increased. Fed actions so far will promote growth--somewhat diminished downside risks. Will act as needed. Vote 9-1.
04/30/08 - 25 bps 2.00%
Notes Noted weaker growth, financial stress, elevated inflation, and signs of higher inflation expectations. FOMC expects actions to date to foster market liquidity and promote growth. Monitoring inflation. Pledged to act as needed. Vote 8-2 with 2 preferring no action.
03/18/08 - 75 bps 2.25%
Notes Noted weaker growth, financial stress, elevated inflation, and signs of higher inflation expectations. FOMC expects actions to date to foster market liquidity and promote growth. Monitoring inflation. Pledged to act as needed. Vote 8-2 with 2 preferring less aggressive action.
01/30/08 - 50 bps 3.00%
Notes Noted deepening of housing contraction, softer labor markets and financial market stress. Downplayed inflation concerns. Cumulative action should promote moderate growth but downside risks remain. Pledged to act as needed to address those risks. Fisher dissented.
01/22/08 - 75 bps 3.50%
Notes Noted weakening economic outlook and appreciable downside risks. Reported improved short-term funding but worsening broader financial conditions. Downplayed inflation concerns. Pledged to act as needed to foster price stability and sustainable growth. Poole dissented.
12/11/07 - 25 bps 4.25%
Notes Noted slowing economic growth and increased financial market strains. Reported improved inflation but persistent risks. Outlook uncertain. Pledged to act as needed to foster price stability and sustainable growth. Rosengren voted for a 50-bps cut. Discount rate cut 25 bps to 4.75%.
10/31/07 - 25 bps 4.50%
Notes Noted recent strength but warned that growth should soon slow. Upside risks to inflation seen balanced with downside risks to growth, implying a neutral bias. Pledged to act as needed to foster price stablity and sustainable growth. Discount rate cut 25 bps to 5%.
09/18/07 - 50 bps 4.75%
Notes Warned of downside risks to growth coming from tighter credit conditions. Also warned that some inflation risks remain. Pledged to act as needed to foster price stablity and sustainable growth. Discount rate also cut 50 bps to 5.25%, maintaining the spread since the 17 August cut.
08/17/07 Discount Rate Cut 5.25%
Notes The primary discount rate cut 50 bps to 5.75% with 30-day term financing available (renewable by borrower) on a broad range of collateral. New FOMC statement: tighter credit conditions have appreciably increased economic risk. The FOMC is prepared to act as needed.
08/07/07 No change 5.25%
Notes Referenced credit market turmoil, but said that economy is likely to expand at a moderate pace. Noted improved inflation, but said not yet convinced improvement is sustainable. Inflation still predominant policy concern. Extent/timing of policy changes dependent on data.
06/28/07 No change 5.25%
Notes Maintained that economy is likely to expand at moderate pace. Cited modest improvement in core inflation but sustained moderation not yet convincingly demonstrated. Inflation remains predominant policy risk. Extent/timing of future policy changes dependent on data.
05/09/07 No change 5.25%
Notes Maintained that economy is likely to expand at moderate pace. Somewhat elevated core inflation seen as predominant policy concern. Extent/timing of future policy changes dependent on data.
03/21/07 No change 5.25%
Notes Maintained that economy is likely to expand at moderate pace. Stated that inflation remains the predominant policy concern. Dropped reference to "additional firming," however, and said that "future policy adjustments" depend on the of data. This infers a neutral bias.
01/31/07 No change 5.25%
Notes Referenced moderate economic growth and improved readings on core inflation. Cited "tentative signs of stabilization" of housing market as contributing factor to firmer economic growth. Warned of high level of resource utilization, but stated expectation that inflation pressures moderate. Extent/timing of future policy changes dependent of data.

 

Fed Calendar 2010

FOMC Meeting Minutes
01/27/10 02/17/10
03/16/10 04/06/10
04/28/10 05/19/10
06/23/10 07/14/10
08/10/10 08/31/10
09/21/10 10/12/10
11/03/10 11/24/10
12/14/10 01/04/11

 

 

The materials on this Web site are for general circulation and general informational purposes only. It does not have regard to the specific investment objectives, financial situations, or particular needs of any specific person or entity. Investors should seek financial advice regarding the appropriateness of investing in any investment strategy or security discussed. Dwight Asset Management Company LLC believes that the information on this Web site has come from reliable sources, but it cannot assure its accuracy, completeness or suitability for any purpose. In addition, Dwight cannot guarantee that the material on this Web site has not been affected by technical malfunctions or unauthorized tampering.
 

Market UpdateRSS 

Resources

|  Contact Us  |   Site Map  |   Terms and Conditions  |   ©2010 Dwight Asset Management Company LLC
Copyright 2010 Dwight Asset Management Company