#federal-reserve

#federal-reserve

A combination of budget jitters and rising bets in favour of a December rate cut from the Bank of England have kept sterling firmly on the back foot so far this week, with the pound slumping towards the 1.31 level on the dollar yesterday, and to its lowest level on the euro since May 2023.

Our house forecast is that they take the MBS paydowns, which are roughly about $16 billion a month, and reinvest those into Treasury bills, said Jeana Curro, managing director and head of agency MBS research at Bank of America. That aligns with a lot of the rhetoric from this Fed. They've said they ideally want to hold a Treasury-only portfolio.

Federal Reserve Governor Christopher Waller says the central bank is entering a "new era" in payments - one that openly embraces decentralized finance (DeFi), distributed ledgers, and digital asset innovation as part of the mainstream financial system. Speaking Tuesday at the Fed's first-ever Payments Innovation Conference in Washington, Waller said the central bank intends to play an "active role" in the crypto revolution transforming the global payments landscape.

S&P 500 futures rose 0.27% this morning, premarket, with indexes in Asia and Europe also broadly rising as traders savored strong economic growth in China, a new "pro-stimulus" government in Japan, and the prospect that President Trump may not be in a position to impose 100% tariffs on Beijing starting November 1. Investors are also increasingly convinced that the Fed's next rate cut is locked in.

Federal Reserve Chair Jerome Powell recently addressed the National Association for Business Economics conference, indicating that the central bank would not intervene in secondary mortgage markets to ease mortgage rates, contrary to some suggestions for boosting homebuyer affordability. The discussion revolved around the Fed's efforts to reduce its significant holdings of securities, notably mortgage-backed securities (MBS), accumulated during the COVID-19 pandemic through quantitative easing measures.

Bessent disclosed that he's trimmed the initial list of 11 candidates he interviewed to five, while also clarifying that he will not be the next chair. He declined to say whether supporting lower interest rates was a requirement, noting instead that he looks for a candidate with an open mind.