An Update on Bank Regulations: The Dead Parrot Sketch*
If there were any doubt, the resignation last week of Michael Barr as vice chair for supervision of the Federal Reserve signals that the effort to tighten capital and supervision rules for banks is dead. Barr was the point person in this effort, and in post-election comments he and Federal Reserve chair Jerome Powell had […]
Waiting for the Fed
Next week’s meeting of the Federal Open Market Committee will set the tone for the markets for the next several months. In one sense it may be a non-event: investors have coalesced around the view that the central bank will cut the main policy rate by 25 basis points to 4.25-4.50%. This would push government-oriented […]
Is Crypto in Our Future?
Crypto is slowly making its way into the consciousness of mainstream investors, including those who invest public funds. One indication is the passage last week by the House of Representatives of FIT21 (the Financial Innovation and Technology for the 21st Century Act), though it is unlikely to become law in this Congress. Another is a (reluctant?) […]
What Treasury’s Borrowing Plans Mean for State and Local Government Investors
A shortage of short-term Treasuries? Perhaps not, but after a rapid expansion of issuance that dominated the market in the past two years, three developments could make it feel like there aren’t enough short-term Treasuries to go around. Why it matters. State and local governments rely on Treasuries as the foundation for their portfolios, with […]
A Big Week for the Bond Market
It is a big week for the bond market with a slew of economic releases (jobs, consumer confidence and a few inflation measures), the Federal Open Market Committee meeting (Tuesday/Wednesday) and investors desperately seeking direction. Public sector investors have a constrained universe: they do not generally invest in equities (though a few do), and their […]
More on Bank Capital Rules: The Fed Chair Speaks
If you were the CEO of one of the nation’s largest banks you might say that the most significant element of last week’s monetary policy report to Congress by Federal Reserve chair Jerome Powell was not about interest rates—“When will you cut them?”—or the state of the economy—“Are we in a recession or not?” Rather […]
And the Winner Is?
A Recap of 2023 Investment Results The PFII Dashboard has been updated. See it here. The sharp rise in rates over the year just ended resulted in strong returns for LGIPs and money funds. We estimate that the full year returns for LGIPS were in the range of 5.10% to 5.30%. (The lack of consistent […]
Beyond the News: Issue #2
We start this week with a comment on the Federal Reserve’s annual bank stress test results, released June 28th—not because they held any real surprises but because they clear the deck for the next act during which the banks, the regulators, and perhaps Congress, will arm wrestle over changes to capital requirements and bank supervision. This could lead to a major alteration in the bank landscape for depositors and investors. There is also the July 1 rollout of FedNow, the new 24/7 payment system. And finally, a bow to money market yields, now largely north of 5%.
Beyond the News: Issue #1
Beyond the News this week covers bank regulations, the status of the SEC’s Money Market Reform proposal and a quick comment on Crypto.