Archives of “April 2021” month

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Fed Chair Powell said China’s approach to digital currency would not work in US

  
  Analysis

The focus on Wednesday’s FOMC and Powell’s following new conference was of course Federal Reserve monetary policy.

As a bit of a sideline Chair Powell also spoke on China’s digital yuan, saying that China’s approach would not work in the United States. Via Reuters reporting:
  • Powell emphasized the Fed’s primary goal is not speed to market but rather avoiding any calamitous misstep in executing digitalization of the dollar
  • “It is far more important to get it right than it is to do it fast”
  •  “The currency that is being used in China is not one that would work here. It’s one that really allows the government to see every payment for which it is used in real time.”
More at that Reuters link above.
The focus on Wednesday's FOMC and Powell's following new conference was of course Federal Reserve monetary policy. 

Responses to the Federal Reserve FOMC continue

  
  Analysis
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Responses continue to flow in, this via Westpac, brief summary comments:
  • The FOMC left its policy settings unchanged, and repeated its key guidance messages, as was widely expected. 
  • The statement was a little more upbeat, noting “progress on vaccinations and strong policy support” are helping strengthen economic indicators, including employment. The rise in inflation was acknowledged, but seen as transitory. 
  • The Fed reiterated :”the path of the economy will depend significantly on the course of the virus, including progress on vaccinations.” QE purchases will remain at at least $120bn per month “until substantial further progress has been made toward” the maximum employment and price stability goals. In Q&A, he said it’s not yet time to start talking about tapering asset purchases.
Response via National Australia Bank:
  • The latest FOMC meeting and press conference from chair Powell has come and gone with no big fireworks, though Treasury yields are lower, as is the USD, after Powell made clear that it was ‘not time yet’ to have a conversation about tapering its $120bn monthly QE bond buying programme and that we ‘are not close to’ the substantial progress toward its employment and price stability goals, that has been set as a conditions for contemplating doing so. 
  • This is despite the FOMC upgrading its economic assessment in the formal post-meeting Statement. This says that ‘indicators of economic activity and employment have strengthened (an  upgrade from ‘ have turned up’ in March) and that ‘sectors most adversely impacted by the pandemic have improved’ (versus ‘remained weak’ in March). 
  • The Statement also removed the adjective ‘considerable’ previously placed in front of the comment, repeated, that  ‘risks to the outlook remain’. The Fed chair also continued to stress the expected transitory nature of the pick-up in inflation that currently looks to be underway

Snippets of Biden’s speech hitting the news: “America is on the move again”

  
  Analysis

US President Joe Biden speaks in front of both houses of Congress Wednesday evening (US time)

  • expected to begin around 9 pm ET (0100 GMT)
Some excerpts from the text are crossing.
“Now-after just 100 days-I can report to the nation: America is on the move again. Turning peril into possibility. Crisis into opportunity. Setback into strength.”
Time to buy me a new hat.

maga hat

Apple reports EPS $1.40 versus estimate $0.99. Revenues $89.58 billion versus 77.30 billion estimate

  
Analysis, US Market

Apple earnings.  Stock closed at $133.58 down $0.81 or -0.60%. The stock trading up 1.2% at $135.20 prerelease

  • EPS $1.40 versus estimate $0.99
  • Revenues $89.58 billion versus estimate $77.3 billion
  • iPhones revenues of $47.938 billion versus $41.49 billion estimate
  • iPad $7.81 billion versus estimate $5.65 billion
  • Mac revenues $9.10 billion versus estimate $6.80 billion
  • Services $16.901 billion versus $15.57 billion estimate
  • Wearables, home and accessories $7.84 billion versus estimate $7.52 billion
  • Cash pile $204.37 billion
  • Apple boost quarterly dividend to $0.22 per share from 20.5 cents per share
  • Authorized boost of $90 billion to existing buyback program
  • The stock is trading up $4.66 or 3.49% at $138.24

The US is considering a major rollback in Iran sanctions to revive nuke deal

  
  Uncategorized

Washington Post with the report that the Biden administration is considering a near wholesale rollback of some of the most stringent Trump-era sanctions imposed on Iran

  • in a bid to get the Islamic Republic to return to compliance with a landmark 2015 nuclear accord
WaPo citing “according to current and former U.S. officials and others familiar with the matter”
—
Talks are rolling on this week in Vienna re resuscitating the nuclear deal.
iran nuke

US stocks close lower on the day

  
Analysis, US Market

Give up gains as Powell calls some markets frothy

the US stock indices are ending the session lower. The S&P gave up gains into the close and is closing just below unchanged. The Dow industrial average is the biggest loser. The Russell 2000 outperformed and is closing marginally higher.  The S&P and NASDAQ are on track for the best month since November.

A look at the final numbers show:
  • S&P index -3.27 points or -0.08% at 4183.45
  • NASDAQ index -39.19 points or -0.28% at 14051.03
  • Dow industrial average -161.59 points or -0.48% at 33823.34
  • Russell index +2.91 points or 0.13% at 2304.17

US dollar resumes slide following the Fed statement

  
Analysis, Forex

Initial reaction is USD selling

There isn’t much to digest in the FOMC decision. There were no actions or changes to guidance. Powell will take questions shortly but if the statement is any indication, he’s not going to offer anything new.
The early market reaction is modest US dollar selling. Some of that is a continuation of what we saw in the run-up to the decision. Then in the short-time before it there was some squaring up. Now it looks to have resumed.
Initial reaction is USD selling
There’s not much temptation to wade into positions until after Powell.
The Fed funds futures market is pricing in the first hike in March 2023.

The full FOMC statement from the April 2021 meeting

  
  Analysis

FOMC statement from April 27, 2021 meeting (there are no revisions to growth, employment, inflation or dot plot)

For release at 2:00 p.m. EDT

The Federal Reserve is committed to using its full range of tools to support the U.S. economy in this challenging time, thereby promoting its maximum employment and price stability goals.

The COVID-19 pandemic is causing tremendous human and economic hardship across the United States and around the world. Amid progress on vaccinations and strong policy support, indicators of economic activity and employment have strengthened. The sectors most adversely affected by the pandemic remain weak but have shown improvement. Inflation has risen, largely reflecting transitory factors. Overall financial conditions remain accommodative, in part reflecting policy measures to support the economy and the flow of credit to U.S. households and businesses.

The path of the economy will depend significantly on the course of the virus, including progress on vaccinations. The ongoing public health crisis continues to weigh on the economy, and risks to the economic outlook remain.

The Committee seeks to achieve maximum employment and inflation at the rate of 2 percent over the longer run. With inflation running persistently below this longer-run goal, the Committee will aim to achieve inflation moderately above 2 percent for some time so that inflation averages 2 percent over time and longer‑term inflation expectations remain well anchored at 2 percent. The Committee expects to maintain an accommodative stance of monetary policy until these outcomes are achieved. The Committee decided to keep the target range for the federal funds rate at 0 to 1/4 percent and expects it will be appropriate to maintain this target range until labor market conditions have reached levels consistent with the Committee’s assessments of maximum employment and inflation has risen to 2 percent and is on track to moderately exceed 2 percent for some time. In addition, the Federal Reserve will continue to increase its holdings of Treasury securities by at least $80 billion per month and of agency mortgage‑backed securities by at least $40 billion per month until substantial further progress has been made toward the Committee’s maximum employment and price stability goals. These asset purchases help foster smooth market functioning and accommodative financial conditions, thereby supporting the flow of credit to households and businesses.

In assessing the appropriate stance of monetary policy, the Committee will continue to monitor the implications of incoming information for the economic outlook. The Committee would be prepared to adjust the stance of monetary policy as appropriate if risks emerge that could impede the attainment of the Committee’s goals. The Committee’s assessments will take into account a wide range of information, including readings on public health, labor market conditions, inflation pressures and inflation expectations, and financial and international developments.

Voting for the monetary policy action were Jerome H. Powell, Chair; John C. Williams, Vice Chair; Thomas I. Barkin; Raphael W. Bostic; Michelle W. Bowman; Lael Brainard; Richard H. Clarida; Mary C. Daly; Charles L. Evans; Randal K. Quarles; and Christopher J. Waller.

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