Latest news with #MichaelS.Derby
Yahoo
6 hours ago
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NY Fed finds moderating inflation expectations in May
By Michael S. Derby (Reuters) -Americans' anxiety about the future path of inflation eased in May, as they also grew more upbeat about the state of their personal finances, a report released on Monday by the Federal Reserve Bank of New York said. The bank reported in its Survey of Consumer Expectations for May that the outlook for inflation across all the horizons it measures retreated. A year from now, survey respondents see inflation at 3.2% versus 3.6% in April, while three years from now it's seen at 3% versus 3.2%. Five years from now, inflation is projected at 2.6% from the prior month's 2.7%. The report found that survey respondents are expecting moderating price gains for gas, rent, medical care and college, while food costs a year from now are seen rising at a 5.5% rate, the highest mark since October 2023. Meanwhile, in May the year- ahead expected rise in house prices stood at 3%, down from April's 3.3%. The moderation in the outlook for inflation took place against a background of high uncertainty over the future of price pressures. Huge and ever-shifting tax hikes on imports imposed by the Trump administration are broadly expected by economists and policymakers to push up inflation, while depressing hiring and growth. The major question is whether the gain is a one-off or the makings of something more persistent. There's been little clarity on how much those tariffs will impact the economy, especially as President Donald Trump raises and lowers his import levies unpredictably. The survey period for the New York Fed report overlapped some of the biggest shifts on tariffs, and the moderation in May's readings will likely bolster officials' confidence that inflation is not fixing for an extended breakout to higher levels. The Fed is set to meet to deliberate on monetary policy on June 17-18 in a gathering that will almost certainly see the central bank leave its interest rate range steady at between 4.25% and 4.5%. Inflation remains above the 2% target and is not expected to moderate to desired levels any time soon, in an otherwise healthy economy. The New York Fed report also found that expectations of moderating future inflation gains came as households also upgraded their views on their incomes, earnings, hiring prospects and finances. The survey found 'slightly' improved views on households' views of their current financial situation in May, as respondents said access to credit improved relative to last year, while expectations of missing a debt payment declined.
Yahoo
6 days ago
- Business
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NY Fed flags $1.06 trillion unrealized loss on bond holdings in 2024
By Michael S. Derby NEW YORK -The Federal Reserve saw $1 trillion in unrealized losses on its holdings last year, according to a report released Tuesday by the Federal Reserve Bank of New York. The bank said in its annual report for the System Open Market Account, the Fed's massive holdings of cash and securities, that the $1.06 trillion unrealized loss in 2024 was 'modestly higher' than the $948.4 billion paper loss seen in 2023. The state of unrealized losses last year was due to 'higher market interest rates across the yield curve' while partially offset by reduced Fed holdings of bonds. The Fed noted unrealized losses capture the difference between the book value of securities it owns versus the current market price. These paper losses do not affect monetary policy operations and are not an issue of note given that the Fed holds its bonds to maturity. The report added the unrealized loss on Fed holdings will likely prevail for years to come. The Fed's balance sheet in recent years has undergone massive expansion, more than doubling to a peak of $9 trillion by 2022 as the Fed bought Treasury and mortgage bonds to stabilize markets and add stimulus during the pandemic. It has been shrinking its holdings for some time, with the overall size of its balance sheet now at $6.7 trillion. The Fed's large holdings are expected to stabilize in January 2026 at $6.2 trillion, the Fed report noted, based on the current view of market participants. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
29-05-2025
- Business
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Fed's Kugler says monitoring markets amid big policy shifts
By Michael S. Derby (Reuters) - Federal Reserve Governor Adriana Kugler said on Thursday she's closely watching markets amid substantial shifts in trade policy and possible diminished investor desire to hold U.S. dollar assets. 'I have been paying attention to the possible interaction between the financial vulnerabilities of firms and their exposure to trade,' Kugler said. 'As global economic tensions rise and supply chains evolve, understanding how a company's financial health intersects with its international trade exposure becomes increasingly crucial' amid what the Fed official called 'an uncertain global economic landscape.' Kugler, whose comments came from the text of a speech prepared for delivery before a conference at the central bank, did not make any forward-looking comments about monetary policy or the economic outlook. The central banker spoke as President Donald Trump's trade war continues to keep financial markets unsettled, while at the same time boosting risks around the economic outlook. The president has sought in a rapidly shifting fashion to dramatically increase import taxes to spur a return to the U.S. of manufacturing, although that agenda was dealt a major setback by a court decision Monday invalidating much of the current slate of tariffs. Fed officials and many private sector economists believe the tariffs will likely increase inflation at least for a time, while pushing up unemployment and depressing growth. The president's trade policy has also introduced heavy volatility into global financial markets and appears to be fueling a move away from dollar-denominated assets, which could have big implications for the future of the American economy. 'I have been monitoring the financial stability implications of the potential lower desirability of U.S. financial assets in flight-to-safety events,' Kugler said, as recent market moves have shown less safe-haven interest in U.S. assets during periods of stress. 'As the global economic landscape shifts, it is crucial to examine how possible changes in the role of U.S. financial assets as a safe haven might affect financial stability both domestically and internationally,' Kugler said. Kugler's remarks followed the release on Wednesday of meeting minutes from the central bank's May 6-7 rate-setting Federal Open Market Committee meeting. Then, some officials noted concern about how investors approached U.S. assets during April's market woes, as government bond yields rose while the dollar lost ground along with stocks and other assets. 'These participants noted that a durable shift in such correlations or a diminution of the perceived safe-haven status of U.S. assets could have long-lasting implications for the economy,' the Fed meeting minutes said. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
22-05-2025
- Business
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Fed's Perli encourages firms' use of Standing Repo Facility
By Michael S. Derby NEW YORK (Reuters) -A Federal Reserve Bank of New York official responsible for implementing monetary policy said on Thursday the central bank is encouraging usage of a key liquidity tool that thus far has been largely dormant. When it comes to the Standing Repo Facility, or SRF, "I encourage our counterparties to use the SRF when it makes economic sense - the facility is there to support the effective implementation of monetary policy and smooth market functioning," said Roberto Perli, who manages the central bank's System Open Market Account, in the text of a speech prepared for delivery at a conference held by his bank. "It's in everyone's best interest if the SRF works as intended," Perli said. The Fed's SRF was launched in 2021 and provides eligible firms with fast cash in exchange for Treasury securities, in a bid to bolster market liquidity and avoid unexpected shortfalls that can be hard for the central bank to counter expeditiously. Thus far, markets, still flush with liquidity, have largely left the SRF alone outside of the end of the third quarter last year, a short period of volatility. Perli reiterated in his remarks that fairly soon the New York Fed will join its afternoon SRF operations with a morning availability. "In the not-too distant future," the New York Fed "will start implementing daily morning SRF operations that will also be settled in the morning," Perli said. "This will be an important step in enhancing the efficacy of the facility, and, at the margin, it can contribute" to allowing the Fed's balance sheet to be smaller than it would otherwise be. Perli is responsible for implementing monetary policy for the central bank, both in terms of the management of its short-term interest rate target and its massive holdings of cash and bonds. Perli noted in his remarks that the ongoing contraction of the Fed's balance sheet, which has seen the central bank shed just over $2 trillion in Treasury and mortgage bonds, likely has some ways to go, although there are signs of tightening money market liquidity. As Fed holdings shrink and reserve levels move down, "upward pressure on money market rates is likely to increase," Perli said, adding "we are starting to see the early signs of this in the repo market, especially around key reporting dates." This rise in repo market chop "is not a cause for concern," Perli said. But he also noted that it's likely to increase the need for markets to use the SRF to manage their liquidity needs. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
15-05-2025
- Business
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NY Fed's Empire State manufacturing index loses ground in May
By Michael S. Derby NEW YORK (Reuters) -Business activity continued to soften in the Federal Reserve Bank of New York's district during May, according to its latest Empire State Manufacturing Survey, released Thursday. The general business conditions index stood at -9.2 in May from April's -8.1, the third straight month of declining activity, the report said. The firms remained "pessimistic" about the outlook, the regional Fed bank also said in its report. The report found improvement in new orders and shipping and lost ground on hiring in May, with mixed findings on the inflation front. The regional Fed bank noted that the prices paid index, at 59.0 from April's 50.8%, was the highest in more than two years. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
