losangelesnewstoday.com
losangelesnewstoday.com October 21, 2017


US Federal Reserve to start unwinding $4.2tn stimulus from October

23 September 2017, 01:19 | Maryann Sutton

The U.S. dollar shone while Asian shares slipped on Thursday after the U.S. Federal Reserve announced a plan to start shrinking its balance sheet and signalled one more rate hike later this year.

According to NY Times, the Fed still expects low unemployment and low inflation to sustain for a few more years.

USA government bond prices fell for an eighth consecutive session after the Federal Reserve indicated on Wednesday that it could raise rates again in 2017.

The 2-year Treasury note yield TMUBMUSD02Y, -0.55% the most sensitive to Fed policy shifts, was little changed at 1.443%, after hitting its highest level since November 3, 2008, according to WSJ Market Data Group.

"Right now, the market sees the Fed more hawkish than anticipated", said Tim Alt, director of currencies and rates at Aviva Investors.

USA economic data is likely to be affected in the coming weeks, however, by the impact of two hurricanes in the southern U.S. - most notably in the oil producing region of the Mexican Gulf and the state of Texas.

The Fed's interest rate policy can have an impact on mortgage rates and cap rates, and by extension property prices. They said they expect three more rate changes next year, two in 2019 and one in 2020.

Twelve out of the 16 members of the policy-setting Federal Open Market Committee indicated they expected to deliver a rate increase-the third of the year-by the end of 2017. Inflation in consumer items besides food and energy - whose prices are more volatile and move around in response to commodities prices - has been below the Fed's target level of 2% for nearly the entire post-recession period.

In November 2008, in the midst of the financial crisis, former Fed Vice Chair Alan Blinder says, the central bank had already exhausted its main tool to fight recessions.

The Weekend Brief: President Trump's Twitter, London Attack Arrests, 2017 Emmys Prep
The "deplorables" came back to haunt Hillary. "I have too little distance and too great a stake in it - instead this is my story". Trump has repeatedly posted critical tweets about his former 2016 presidential campaign rival.

After buying up United States treasuries and mortgage-backed securities as part of "quantitative easing", the United States central bank's balance sheet has swelled to $4.5 trillion, around four times its size before the financial crisis.

The plan starting next month will gradually reduce the size of the Fed's $4.5 trillion in investment holdings, which were built up during the financial crisis.

Yellen also said the bank still believes that persistently low inflation is temporary.

Some analysts thought the Fed might would raise interest rates today because of Chairman Yellen's press conference. If the Fed were to coalesce around that belief, doubts could arise about whether it should keep raising rates or delay further hikes.

In its other major decision, Fed policymakers left the benchmark rate unchanged in the range of 1 to 1.25 percent.

The bank did lower its projection for its so-called neutral rate.

YDSTIE: A Fed research paper found quantitative easing lowered long-term interest rates by a full percentage point.

"In the longer run, we may see government infrastructure spending in the areas most affected, a move that will provide some small fiscal stimulus".



Other News

Trending Now

4 iOS 11 features that will be genuinely useful
Apple has redesigned iTunes so that it focuses on sales of music, movies, TV shows, audiobooks, and podcasts . ITunes 12 .7 for Mac was released on Tuesday with a major change in the app .

Russian Federation starts big war games along its borders, alarming its neighbors
The most recent Zapad exercises, which occur every few years, took place in 2013, just before Russia's 2014 annexation of Crimea . It also serves to validate aspects of the Ukraine's military training program.

GOP Senators Throw another Health Care Hail Mary
They want to stabilize the Obamacare individual insurance market by protecting its "cost-sharing subsidies". And Wisconsin Democrat Tammy Baldwin is supporting Senator Bernie Sanders' Medicare for All bill.

Tata Steel and ThyssenKrupp Agree to Create European Steel Giant
The deal will require approval of Thyssenkrupp's supervisory board, Tata Steel's board of directors and European regulators. Shares in Tata Steel rose 2% on news of the deal in Mumbai, while those in ThyssenKrupp opened 5% higher in Frankfurt.

Apple Watch Series 3 Cellular Connection Costs $10 a Month
The set-top box is a central part of Apple's strategy, but the company's aiming for much more than a slot underneath your TV. Apple will launch pre-orders for the Apple TV 4K from 15 September , with the first devices shipping from 22 September.

FTC warns of Equifax phone scam after data breach
An emailed statement from the credit-monitoring agency said the executives "had no knowledge" of the breach beforehand. The vulnerability was a critical weakness for many large websites that were built using the software.

Ryanair cancellations: 315000 customers notified and over half on new flights
However, the airline said Wednesday that it has allocated replacement flights for more than half of those passengers. The last of these is key to its appeal: many businessmen chose Ryanair more for its punctuality than its cheapness.

Ryanair's Michael O'Leary admits flight cancellations have caused 'a mess'
Some 162 flights were dropped between Saturday and Sunday with another 164 due to be cut through Wednesday. Firstly, the company changed its holiday year from January to December rather than April to March.

Legitimacy of Kurdistan referendum comes from sacrifices of Kurds: Barzani
Iran, Turkey and the United States also object to the vote, fearing further instability. It is claimed by both the Kurds and the central government in Baghad.

Phillies Pitcher Records an Out With His Jersey
Hector Neris recorded his 22nd save for the Phillies despite allowing a solo homer to Curtis Granderson in the ninth. And he's at four, so I definitely know he's trending in the right way. "You can see him feeling for things".