Discover and read the best of Twitter Threads about #monetary

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FT opinion article: “Let the Fed put money where it is really needed”. She means CBDC. The problem is that the Fed now needs to take money away, not add to it. This is not going to end well. Thread #Fed #monetary policy #markets #bonds #equities ft.com/content/0c8636…
1/The author argues that the Fed has overreached its mission. It has fuelled a shadow banking system and an asset bubble and will now have to create a recession in order to control inflation.
2/And politicians have been happy to outsource the decisions because they can then claim they are not to blame. The Fed is being asked to do stuff it is not qualified to do (same as the Supreme Court).
Read 6 tweets
A few months ago, #markets expected U.S. #inflation to peak by mid-2022 at around 7% to 8% at the headline level and then anticipated that generalized #price gains would decline into year end, closing the year around 4%.
However, the tragic war now unfolding with Russia’s attack upon Ukraine has not only sent #energy prices skyrocketing but it has led to much greater uncertainty over #economic growth and #MonetaryPolicy reaction functions, in Europe and indeed around the world.
Core #CPI (excluding volatile #food and #energy components) came in at 0.5% month-over-month and 6.4% year-over-year. Meanwhile, headline CPI data printed at 0.8% month-over-month and came in at 7.9% year-over-year, the greatest increase over a 12-month period since January 1982.
Read 17 tweets
September witnessed a somewhat disappointing nonfarm #payroll gain of 194,000 jobs, which was weaker than the upwardly revised August gain of 365,000 and was well below #economists’ consensus estimates of nearly 490,000 jobs.
Clearly, there are significant #labor supply issues limiting the pace of recovery. Further, the #unemployment rate declined meaningfully, from 5.2% to 4.8% in Sept, and average hourly #earnings saw gains of 0.62% m-o-m, which brings the measure to 4.58% greater on a y-o-y basis.
The most interesting part of today’s #JobsReport, and much of the other recent #economic/corporate data, is that it’s the supply of resources that’s creating systemic pricing pressure, as well as consequently dulling growth of an #economy not lacking demand in virtually any area.
Read 11 tweets
As expected, the @federalreserve’s Federal Open Market Committee continued to discuss its plans to reduce, or #taper, the pace of its #AssetPurchase program at yesterday’s meeting.
While the details of this discussion were fairly sparse, the Committee statement did state that: “If progress continues broadly as expected, the Committee judges that a moderation in the pace of asset purchases may soon be warranted.”
Further, at the recent #Fed conference in Jackson Hole, Wyo., and at the press conference, Fed #ChairPowell emphasized that both he and most Committee participants now consider the test of “substantial further progress” toward the #inflation mandate to be largely satisfied.
Read 10 tweets
It was 73 degrees and sunny in #JacksonHole, Wyoming, today; a perfect day for all those who were there….
Yet, there were no #monetary policy officials present at the traditional location of the @KansasCityFed’s late-summer #economic policy symposium, since they were conducting a “virtual symposium.”
That symposium provided #ChairPowell the opportunity to lay out a reasonably sunny perspective on the U.S. #economy, but also one that was not out of the woods yet, in terms of Covid variant risk and a maximum #employment target still to be achieved.
Read 10 tweets
Great conversation with @MerrillLynch CIO Chris Hyzy, as part of their #MerrillPerspectives event. Some of the topics we discuss follow and the full conversation can be accessed here: ml.com/2021-midyear-e…
On the #market lessons stemming from the pandemic, I suggested that- stepping back- while a lot has been thrown at the #economy and markets over the past 30 years, in every case the #policy response has been critical to evaluate in judging the ultimate impact: policy matters!
That said, we think there is an overestimation of the importance of exceedingly low #policy rate levels to the recovery but maintaining the stability and #liquidity of the financing #markets is critical, particularly at the top end of the capital stack.
Read 10 tweets
Super excited to see our paper on #Covid19 #Fiscal Support and its Effectiveness, with Alexander Chudik @DallasFed & @mraissi80 @IMFNews, out in Economics Letters. You can read it (free access) from here: authors.elsevier.com/c/1dDlMbZedt0om #TGVAR 1/n Image
With new variants/waves & reimposition of restrictions in some regions, governments around the world are calling for a careful assessment of the effectiveness of the adopted #Covid19 #fiscal measures before they embark on further easing or tailoring of measures 2/n
The #Covid19 pandemic led to a sharp tightening of global #financial conditions at the acute phase of the crisis and has inflicted large economic losses across the world (see Figure below) ... 3/n Image
Read 28 tweets
More conspiracy theory from Financial Times:

"With a new US admin., & [] the vaccination rollout under way, now is a good time for the major economies of the west (& ideally the world) to sit down & devise a new international #monetary order."

#GreatReset h/t @johnsteppling
"As part of that there should be widespread #debt cancellation, especially the gov't debt held by #central #banks. We estimate that amounts to approximately $25tn of gov't debt in the major regions of the global economy."

ft.com/content/39c53b…
"Whether debt cancellation extends beyond that should be central to the negotiations between policymakers as to the construct of the #new #system ...The implications for bond yields, post-debt cancellation, need to be fully thought through and debated."
Read 14 tweets
While our February 18th monthly client call argument for rising #RealRates appeared prescient, we were surprised by the magnitude of last week’s #move and would expect a more benign evolution toward #equilibrium going forward.
Taking a stab at periodizing the past year: 1) in Feb/Mar 2020 the Covid crisis was priced into #markets, real #rates spiked higher, #inflation breakevens collapsed and #investors scrambled to raise #cash as the #SPX experienced its fastest 30% drawdown in history.
Then, 2) from Apr through Oct 2020 we witnessed the #market impact of monumental #monetary and #fiscal policy responses to the #crisis, as policymakers successfully sought to force #real rates down and restore #inflation expectations.
Read 10 tweets
In the 2021's first issue of #Cantillon Effects, we discussed the #inflation which now pervades our lives: not just the narrow, disputed one relating to goods prices, but the inflation of rhetoric, passions, tribalism & despotism.

Over this thread, we'll present our case:-
1/x
Replacing the "public square" with the "cyber swarm" has not been conducive to reason or civility, for all that it has opened up new possibilities of disseminating news and opinion.
2/x
The #stakeholder capitalism being built while we're confined to quarters is a world where, we're glibly assured, " you will (truly) own nothing - the #centralbank will ensure your fake asset's notional price is misleadingly high - and you'll be happy!" Really?
3/x
Read 8 tweets
Basics of learning #Bitcoin
#Bitcoin does not flow through the traditional #banking system
#Bitcoin transactions are made via #computer immediately with usually low charges
Read 15 tweets
A tremendous amount of ink has been spilled discussing the supposed quandary of the #equity market’s robust recovery since March, while at the same time #economic improvement has been more uneven and uncertain.
At the heart of this misunderstanding is an apples-to-oranges comparison: the fact is that the #stock #market and the #economy, while connected, are two meaningfully distinct entities.
As a case in point, the correlation between domestic corporate #profits and #GDP #growth collapsed in the 1990s and has hovered near zero for the past three decades. Image
Read 7 tweets
The #deficit #myth #deficitmyth by @StephanieKelton #MMT modern monetary theory
Myth N. 1: The #state should budget like a #household
#RealityCheck : unlike a household, a #SovereignNation, which owns its national #centralbank, issues the #currency it spends
Myth N. 2: #deficit is evidence of #overspending
#RealityCheck: look to #inflation for evidence of over spending
The purpose of #taxes is not to pay for #government expenditures but to help rebalancing the #wealth distribution #MMT
Read 56 tweets
Core #CPI surprised to the upside, driving a solid gain in headline #inflation as well. The strength in the July report was driven by components impacted by #Covid unwinding some of their previous large declines and bouncing back from depressed levels.
We saw solid gains in transportation services components, such as #airfares, motor vehicle #insurance and rental #cars, which reflect that bounce back.
The #monetary and #fiscal policy responses to the crisis have credibly bridged the #economic gap caused by the unprecedented lockdowns, yet as #inflation deficiencies were already present pre-Covid, it’s likely that #policy will need to remain supportive for some time.
Read 5 tweets
The Chinese #economy stayed on the hot side in 2002-2011. The average #GDP deflator was 4.6%; the real #interestrates was lower than the neutral one. But since 2012, the economy was on the cold side, with the average GDP deflator falling to 2.1% in 2012-2019...1/6
The real interest rate was lower than the neutral one in 2002-2011. During this period, although #monetary policies remained tight with an overall fiscal surplus, there was still room for further tightening both monetary and fiscal policies when we look back now...2/6
In 2012-2019, it was completely the opposite. GDP deflator was low and the real interest rate was higher than neutral. Monetary policy was relatively loose...3/6
Read 6 tweets
.#Markets keep pivoting off of a great deal of noise running through the #media, but as we’ve indicated for some time, it’s worth taking a step back to consider the power behind #monetary rescue programs and their influences.
Critics of the efficacy of quantitative easing (#QE) often contend that asset purchase proceeds remain stranded in the #financial #economy
but the transfer of #capital to #MainStreet actors; amounts to the first direct payment of money creation from the #Fed into the real #economy since WW2, catalyzing broad #money and incremental #NGDP growth, and Chair Powell also indicated those purchases won’t run off.
Read 6 tweets
Both headline and core #CPI witnessed declines of -0.8% and -0.4% in April, the result of the dramatic #economic lockdowns across the country in response to the #CoronavirusPandemic, with particular weakness seen in airfares, hotels, used/new car prices and apparel.
While this data clearly illustrates the #disinflationary impact of locking down large segments of the #economy in an effort to gain control of the health crisis, there’s a danger in merely extrapolating recent trends.
In fact, we think 2020’s broad #deflationary influences may well lead to higher rates of #inflation next year.
Read 6 tweets
The March #JobsReport only scratched the surface of what was unfolding, but the month of April displayed the catastrophic reality of significant #economic shutdowns across most states.
Indeed, nonfarm payroll #employment plummeted by -20.5 million in April, the #unemployment rate vaulted three-fold, to 14.75%, and while #job losses were widespread, leisure and hospitality was hit particularly hard.
In contrast, the information #technology sector suffered much fewer job losses, at least partly because the sector has #invested for growth for years, has witnessed greater levels of consumer #spending and has benefited from a dramatic rise in #online purchasing. Image
Read 4 tweets
Lets talk about #Global #CentralBanks and their #MonetaryPolicy stances given #COVID19. Specifically, lets ask ourselves: "Can Central Banks Help Fight COVID-19?"
The best place to start is to note that #Global #Growth was already facing considerable downside risks before the #COVID19 outbreak December 2019. The slow down in global growth came on the back of trade (china vs. us) and geopolitical (Brexit etc.) tensions...
To this end, institutions such as the #IMF & #WorldBank revised down their 2020 #Economic #Growth outlook & emphasised the need for a more coordinated #policy approach between #monetary & #fiscal policy around the globe to "rescue" growth from the doldrums...
Read 14 tweets
Lets talk about the 1st meeting of #G20 #Finance Ministers and #CentralBank Governors. Specifically, lets talk about the short to medium term headwinds for global #Economic #Growth...
If you haven't been living under a rock, and you happen to be an avid scholar / practitioner in the world of #Global #Finance / #CentralBanking, then you know that the Group of 20 Finance Ministers & Central Bank Governors met on the 22-23 Feb 2020 in #Riyadh, #SaudiArabia...
The 2020 #g20 meeting of finance ministers & central bank governors in #Riyadh brought together key #Fiscal and #Monetary #Policy makers to discuss, inter alia, what #Global #Economic #Growth prospects look like in the short to medium term...
Read 12 tweets
In January, core #CPI (excluding volatile food and energy components) came in at 0.2% month-over-month and 2.3% year-over-year. Over the year’s first half we expect Core #PCE to draw closer to 2%.
Yet, while we foresee continued firmness in #inflation, we’re skeptical it will be sustained and it won’t resemble demand-driven inflation, but rather it will be a function of favorable base-effects, #currency moves and a recovery in #commodity prices in the year’s back half.
From the standpoint of #monetary policy, we think the @federalreserve is on target with its policy stance today, and it will be closely watching the developments in inflation, in labor markets and critically in #financialconditions.
Read 4 tweets
Lets talk about #Argentina and the #IMF. Specifically, lets talk about the biggest IMF #Bailout in #History...
Before we start talking about #Argentina & how the #IMF has extended to them a #Bailout that is by far the biggest in the organisation's history, let us first appreciate what the functions of the IMF are...
The #IMF’s main goal is to ensure #stability of the #international #monetary & #financial #system. It helps resolve crises, and works with its 189 member countries to promote #growth & alleviate #poverty...
Read 12 tweets
Let us talk about recent #Trends in #Global #Monetary #Policy, say, from 2015 to 2019...
Before I do that, let me give you an updated list of #CentralBank #MonetaryPolicyCommittee meetings for 2020...The matrix attached shows MPC dates for #CBL #SARB #FED and #ECB...
Surely we are conversant with the terms #dovish #hawkish #loose #tight #expansionary & #contractionary when it comes to #monetarypolicy jargon. What did the #global monetary policy landscape look like from 2015 to 2019? Was it loose or tight, expansionary or contractionary?
Read 12 tweets
We are in a New Age of #risk. Bear with me, folks. We have lived through an unprecedented decade of #monetary experimentation on a scale unknown in modern times and, certainly, never seen since the end of the #gold standard. Cash - traditionally a cornerstone of risk management +
+ Is now generating zero-to-negative returns. The only way to hold it is to make a bet on a massive decline in risky assets valuations going forward. As uncertainty (and risk) of negative and more deeply-negative yields on deposits rises (and it is rising), we've converted cash +
+ into a risky asset, making cash holdings speculative, rather than purely defensive. Next up: gold. This still holds value as a purely defensive play, but risks are rising here too. First, risk of sell-off in a general markets correction (when investors dump all assets they can+
Read 12 tweets

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