{"id":44742,"date":"2019-03-25T09:04:57","date_gmt":"2019-03-25T14:04:57","guid":{"rendered":"https:\/\/olduvai.ca\/?p=44742"},"modified":"2019-03-25T09:05:43","modified_gmt":"2019-03-25T14:05:43","slug":"weekly-commentary-doing-harm-with-uber-dovish","status":"publish","type":"post","link":"https:\/\/olduvai.ca\/?p=44742","title":{"rendered":"Weekly Commentary: Doing Harm with Uber-Dovish"},"content":{"rendered":"\n<h3 class=\"wp-block-heading\"><a href=\"http:\/\/creditbubblebulletin.blogspot.com\/2019\/03\/weekly-commentary-doing-harm-with-uber.html\">Weekly Commentary: Doing Harm with Uber-Dovish<\/a><\/h3>\n\n\n\n<p>This week\u2019s FOMC meeting will be debated for years \u2013 perhaps even decades. The Fed essentially pre-committed to no rate hike in 2019. The committee downgraded both its growth and inflation forecasts. Having all at once turned of little consequence, we can now dismiss the 3.8% unemployment rate and the strongest wage growth in a decade. Moreover, the Fed announced it would be scaling back and then winding down balance sheet \u201cnormalization\u201d by September. This put an impressive exclamation point on a historic policy shift since the December 19th meeting. At least for me, it hearkened back to a Rick Santelli moment: \u201cWhat\u2019s the Fed afraid of?\u201d<\/p>\n\n\n\n<p>Markets came into the meeting fully anticipating a dovish Fed. Our central bank returned to the old playbook of beating expectations. In the process, the Federal Reserve doused an already flaming fixed-income marketplace with additional fuel.&nbsp;<\/p>\n\n\n\n<p>After trading to 3.34% during November 8th trading, ten-year Treasury yields ended this week a full 90 bps lower at 2.44%, trading Friday at the lowest yields since December 2017. Yields were down 15 bps this week \u2013 17 bps from Tuesday\u2019s (pre-Fed day) close &#8211; and 28 bps so far in March. And with three-month T-bill rates at 2.40%, the three-month\/10-year Treasury curve flattened to the narrowest spread since 2007 (briefly inverting Friday). Five-year Treasury yields ended the week inverted 16 bps to three-month T-bills \u2013 and two-year Treasuries were inverted about eight bps.<\/p>\n\n\n\n<p>Collapsing sovereign yields were a global phenomenon. Japan\u2019s 10-year JGB yields declined four bps Friday to negative eight bps (-0.08%), the lowest yields since September 2016. With Germany\u2019s Markit Manufacturing index sinking to the lowest level since 2012 (44.7), bund yields dropped seven bps to negative 0.015% &#8211; also lows going back to September 2016. Swiss 10-year yields sank 12 bps this week to negative 0.45%. Two-year German yields closed out the week at negative 0.57%. UK 10-year yields dropped 20 bps (1.01%), Spain 12 bps (1.07%) and France 11 bps (0.35%).<\/p>\n\n\n\n<p>&nbsp;\u2026click on the above link to read the rest of the article\u2026<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Weekly Commentary: Doing Harm with Uber-Dovish This week\u2019s FOMC meeting will be debated for years \u2013 perhaps even decades. The Fed essentially pre-committed to no rate hike in 2019. The committee downgraded both its growth and inflation forecasts. Having all at once turned of little consequence, we can now dismiss the 3.8% unemployment rate and [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[2],"tags":[16861,303,8364,1849,4512,3650],"class_list":["post-44742","post","type-post","status-publish","format-standard","hentry","category-economics","tag-doug-noland","tag-fed","tag-federal-open-market-committee","tag-financial-markets","tag-fomc","tag-us-federal-reserve"],"_links":{"self":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/44742","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=44742"}],"version-history":[{"count":1,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/44742\/revisions"}],"predecessor-version":[{"id":44743,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/44742\/revisions\/44743"}],"wp:attachment":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=44742"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=44742"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=44742"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}