Research Briefing - December hike likely, still uncertainty on inflation
On Wednesday, November 22, the Federal Reserve released the minutes of the October 31-November 1 FOMC meeting. The minutes support a December rate hike, despite a high degree of uncertainty of whether the factors holding down inflation will be transitory or more permanent. This suggests a continued gradual pace of rate hikes next year.
Fed 'Rules Regarding Delegation of Authority'
The announcement that Chair Janet Yellen will step down as a Governor when her successor as Chair is sworn in -- presumably Jerome Powell -- sets up a real possibility that the Board of Governors will have four of seven seats empty in the near future. This situation would be unique in our experience. The Board has not had a full complement since July 2013, but it has never had more than three vacancies at a time. At junctures where this was a real threat, the President and the Senate acted quickly to ensure there were candidates nominated and confirmed before that came to pass. In the present circumstances, the Federal Reserve is preparing for the possibility.
Today Is SMR Survey Day!
SMRA will conduct the weekly Portfolio Managers Survey today. Responses can be entered at the link here. Summary data will be proprietary to SMRA clients. The results will be presented on Wednesday. Thank you for your participation!
Portfolio Manager Survey
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.
Fixed Income Focus: Back to Flattening; Tax Reform to Get Harder
The corrective steepening in the yield curve late last week quickly went out the window this week, as front-end yields continued to climb, resuming the curve flattening trend.
The GOP tax plan cleared a major hurdle this week with passage in the House, but tax reform only gets harder from here. It will be harder for the Senate, with its slim Republican majority, to pass a plan. The health care provisions in the plan could complicate things further.
Fixed Income Commentaries