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Confusion around Fed’s Clarida speech throws off investors

“This was later corrected, saying that the central bank would only focus on bills” writes Sunny Oh for marketwatch.com. A scheduled speech by Federal Reserve Vice Chairman Richard Clarida ended up throwing off bond investors on Friday who saw headlines suggesting the central bank had made a sudden tweak to how it would expand the U.S. central bank’s $3.6 trillion balance sheet.New York Fed President John Williams had said on Thursday that the central bank would only buy T-bills, but that it could acquire short-term coupon-bearing securities later.The text of…

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Fed’s Williams says central bank would adjust plan to soothe funding markets ‘as appropriate’

“New York Fed President John Williams said Thursday that the central bank was closely monitoring its measures to soothe pressures in funding markets, and could adjust its plans” writes Sunny Oh for marketwatch.com. Williams said the central bank could still tweak “technical details,” suggesting this could include buying short-dated coupon-bearing securities later.Investors and analysts have raised worries that the U.S. central bank will struggle to source sufficient bills from banks and investors.The repo market is where hedge funds and banks lend funds in return for collateral such as Treasurys or…

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Exclusive: Wall Street banks see green light from Fed on reserves – sources

“Banks can park those excess reserves at the Fed, either in idle cash or by buying Treasury bonds” writes Midwest Communications Inc for 95kqds.com. Bankers previously came out of that process understanding that the Fed preferred them to hold cash rather than Treasury bonds in times of stress, industry sources said.NEW YORK/WASHINGTON (Reuters) – Wall Street banks believe they are getting a green light from supervisors to hold more Treasury debt and less cash after last month’s volatility in overnight lending markets, three industry sources told Reuters. Source: 95kqds.com

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Probability of an October Fed rate cut soars after disappointing retail-sales data

“Fed funds futures markets on Wednesday indicated a 90.3% probability that the Federal Reserve will cut interest rates for a third consecutive meeting when the central bank’s interest-rate setting committee gathers Oct. 30 and 31, up from a 73.8% chance Tuesday, according to CME Group data” writes Markets Reporter for marketwatch.com. The move follows a Commerce Department estimate that U.S. retail sales fell in September for the first time in seven months.The yield on the 10-year U.S. Treasury note TMUBMUSD10Y, -1.09% fell 2.7 basis points to 1.742%, that on the…

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St. Louis Fed president: US economy could see ‘sharper-than-expected slowdown’

“Louis Federal Reserve warned Tuesday that the U.S. economy could see a sharper slowdown than expected in the coming months” reports washingtonexaminer.com. That uncertainty, Bullard said, “Creates a disincentive for global investment.” “Slower global growth may feed back into slower growth in the U.S.,” he said.Louis, said risks facing the economy include uncertainty over global trade policy and the slowing of the global economy. “U.S. monetary policy cannot reasonably react to the day-to-day give and take of trade negotiations,” Bullard said Tuesday during a presentation at a conference in London,…

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Bullard says Pandora’s box has been opened on trade that will take a long time to resolve

“Louis Fed President James Bullard said markets may be too optimistic on the time it takes to reach trade deals” writes European Markets Editor for marketwatch.com. “Markets have had this idea that trade resolution was just around the corner,” he said.On the issue of soft versus hard economic data, he acknowledged that consumption data has been solid but said that was “backwards looking.”.  Source: marketwatch.com

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Fed’s Bullard says ignoring the Treasury yield curve has burned him in the past

“Asked by MarketWatch, he declined to quantify a probability of recession and acknowledged that most estimates of them are based off the yield curve” writes European Markets Editor for marketwatch.com. There are a lot of valid reasons why the inversion of the U.S. Treasury yield curve — that is, the yield of short-term bonds being higher than that of longer-term securities — isn’t a sign of economic worries.Bullard, at a conference on monetary and financial policy in London, replied that he was burned twice as a Fed staffer in the…

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Gold settles higher, extends gains in electronic trade after Fed minutes

“Gold prices climbed on Wednesday to snap a three-session streak of declines, as traders eyed developments ahead of U.S.-China trade talks” writes Markets Commodities Reporter for marketwatch.com. Prices then extended those gains in electronic trading after minutes from the Federal Open Market Committee’s September meeting showed that Fed officials had grown more worried about the economy.In electronic trading, gold for December delivery GCZ19, +0.63% was at $1,513 an ounce shortly after the meeting minutes. The contract had climbed by $8.90, or 0.6%, to settle at $1,512.80 an ounce on Comex,…

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Powell sees cooler US hiring in possible hint of rate cuts

“In his speech, Powell also said the Fed plans to renew its Treasury security purchases to pump more cash into overnight money markets” reports thebusinessjournal.com. That step is intended to help keep short-term rates at their target level and isn’t needed to support the economy, the Fed chairman added.Corporate tax payments due at the end of the quarter and bond sales by the federal government had soaked up enough cash to send the overnight rates sharply higher. Source: thebusinessjournal.com

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