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Could Fed Profitability Be A Factor In Unwinding the Balance Sheet?
In this note we make that case that the FOMC should take into account the risk of incurring persistent losses as the interest rate on reserves (IOER) is increased. This risk could be diminished if the size of the system open market account (SOMA) is reduced relatively quickly in comparison to the impending increases in the IOER. Our basic concern is that losses, which would result in the suspension of remittances to the Treasury Department, could become a political "hot Potato" inviting unwanted Congressional intrusion, compromising Fed independence.
Apr  27  
Federal Reserve Research

Fixed Income Focus: Treasury Rally Stalls...Month-End Auction Preview
Treasuries steadied this past week after the strong rally since mid-March, and yields were just 1 to 3 basis points lower on the week mid-Friday afternoon. The long-end of the curve lagged slightly after the Primary Dealer Meeting Agenda ahead of the May Refunding included a question about factors Treasury should consider if they were to issue a longer-term bond, "e.g., 40-, 50-, or 100-year."

Treasury will come to market during the week ahead with an $88.0 billion package of month-end 2-year, 5-year, and 7-year notes. They will hold a $26.0 billion 2-year note auction on Tuesday afternoon, a $34.0 billion 5-year note auction on Wednesday afternoon, and a $28.0 billion 7-year note auction on Thursday afternoon. The three auctions will raise a combined $7.293 billion when they settle on Monday, May 1, after taking into account maturing issues Fed holdings in their SOMA portfolio.
Apr  24  
Fixed Income Focus

US Economic Chartbooks
Please see our Economic Week Ahead Chartbook for a discussion of next week's economic releases provided in a visually friendly format that includes graphs, brief descriptions of SMR's forecasts, and links to detailed data previews. If you missed anything from last week, see our Economic Week in Review Chartbook for a look back at the releases with links to full analyses.
Apr  21  

SMRA Beige Book Activity Index Steady at 1.00 in April Report
The SMRA Beige Book Activity Index (BBAI) was 1.00 in April, unchanged from the March Beige Book. On balance, we find the tone of the report somewhat mixed, but on balance positive. Overall conditions remained consistent with modest-to-moderate expansion. Conditions were described as showing "modest" or "moderate" growth in all 12 Districts. Growth was "modest" for New York, Philadelphia, Richmond, Atlanta, St. Louis, Minneapolis, and Kansas City. Growth was "moderate" for Cleveland, Chicago, Dallas, and San Francisco. Boston split the difference and said growth as modest-to-moderate for a third report in a row. The economies of the 12 Districts continue to turn out solid economic growth, but without much sign of any momentum higher.
Apr  19  
Federal Reserve

Viewpoint for Minutes of March 14-15 FOMC Meeting
The minutes of the March 14-15 FOMC meeting were much as expected regarding the outlook for interest rate policy. There was also a fairly extensive discussion about planning for phasing out or ending the policy of reinvestments in the Fed's balance sheet holdings. There was a hint that the FOMC could announce and possibly implement a change in reinvestment policy by the end of 2017, sooner than previously anticipated. Please click the link to read the "Viewpoint on Minutes of March 14-15 FOMC meeting".
Apr  5  
Federal Reserve


Latest Research HERE for Research Window
17:05Treasury Market Summary for Thursday, April 27
16:47Trading Tomorrow - GDP, ECI, Chicago, U of Michigan
16:29Weekly Dealer Data: Rise in MBS Offset the Drop in Treasury Holdings
15:06Could Fed Profitability Be A Factor In Unwinding the Balance Sheet?
15:04Treasury Technicals: 10s Face Key Test of 2.26% Ahead of GDP, UofM
13:177-Year Bidding Details: Good Demand Overall Including Record Indirects
13:057-Year Auction Results ... Very Strong; Record Indirects
11:28The 7-Year Note Auction Preview ... Stats, Facts & Observations
11:03Treasury Holds Bill Auctions Steady
10:28Pending Home Sales Slip in March


Chart of the Day
10-Year Sentiment Returning to Supportive Levels
10-Year Sentiment Returning to Supportive Levels

Thursday, 27 Apr
Initial Jobless Claims  22-Apr  257K Vs Prev's 243Kr
  Continuing Claims  15-Apr  1988K Vs Prev's 1978Kr
  Advance Good Trade Balance  Mar  -$64.8B Vs Prev's -$63.9Br
  Wholesale Inventories MoM  pMar  -0.1% Vs Prev's +0.2%r
  Durable Goods Orders  Mar  +0.7% Vs Prev's +2.3%r
  Durables Ex Transportation  Mar  -0.2% Vs Prev's +0.7%r
  Pending Home Sales  Mar  -0.8% Vs Prev's +5.5%
  Kansas City Fed Manufacturing Activity Index  Apr  7.0 Vs Prev's 20.0
  Treasury will announce 3-month and 6-month bill auctions
  Treasury will hold a 7-year note auction