Wall Street closes lower as Federal Reserve considers trimming its balance sheet

Apr 06, 2017, 02:23
Wall Street closes lower as Federal Reserve considers trimming its balance sheet

Most Federal Reserve policymakers believe that the central bank should begin trimming back its $4.5 trillion balance sheet this year, provided that economic data holds up.

At a news conference after the Fed's policymaking committee announced the rate hike in March, Fed chair Janet Yellen emphasize that the committee wants to use changes in the short-term interest rate target as its main tool for influencing monetary policy, not the balance sheet. The minutes showed that Fed officials mostly preferred to tie the change to the strength of the economy, and to gradually phase out reinvestments of the proceeds from the Treasury and mortgage-backed securities that mature, rather than suddenly ceasing reinvestments altogether.

Interestingly, some members of the Fed also noted that seemingly non-economic policies that Trump has thrown around could end up weighing on economic activity.

Parts of his agenda, such as healthcare - which has considerable consequences for taxation - have stalled amid divisions in the majority Republican Party.

The central bankers now expected President Donald Trump's plans for expansionary fiscal policy would likely not begin until 2018.

While FOMC members expected gradual economic growth, the minutes also show some disagreement over the near-term dangers of inflation.

Members were split over whether stronger inflation warranted faster hikes now or a more gradual pace given the persistence of low inflation in the past.

Ms. Pac-Man Fully Playable in Google Maps Right Now
This is yet another classic example of how Google celebrates April Fool's Day , not to mention their great love for video games. For now, you can kill some time in the classroom or office by opening up Google Maps and playing a few rounds of Ms.

Mata joins Smalling and Jones on United injured list
They have to play with pain, play with fatigue because there is no other chance. "Chelsea before and after are on holidays".

National Hockey League to hold hearing on Sabres' Ristolainen's hit on Guentzel
Guentzel got up briefly before stumbling to the ice and did not return after being escorted immediately to the locker room. The hit came in the first period of Tuesday's game when Ristolainen collided with the Penguins forward along the boards.

But Mr Weston said the minutes were not the only factor weighing on investors overnight. Reducing the balance sheet could have the same impact on the markets as a rate hike.

"Fed officials remain split on the question of how much inflation pressure is now in the system. but it has become hard for doves to argue that the economy is still some way from full employment", he wrote.

The committee made no decisions regarding the balance sheet and agreed to renew the discussion at subsequent meetings.

"At the same time, several participants cautioned that upcoming elections in European Union countries posed both near-term and longer-term risks", the minutes said.

Concern about that possibility contributed to a selloff of stocks Wednesday afternoon after the minutes of the Fed's March meeting were released. Many economists have said they think rate increases will occur at the June and September meetings.

US stocks SPX, +0.56% pared gains after the release of the minutes, and the yields on government bonds TMUBMUSD10Y, +0.30% rose.

Among major United States indices, the Nasdaq fell the most at 0.6 per cent after earlier hitting an all-time intraday high earlier in the day.

YOU MIGHT ALSO LIKE
  • Prosecutors: Facebook assault victim was threatened with dog

    Prosecutors: Facebook assault victim was threatened with dog

    He was charged with "aggravated criminal assault, manufacturing of child pornography, and dissemination of child pornography". Associate Judge Patricia Mendoza scheduled the next hearing for April 28, the Chicago Sun-Times is reporting.

    Michail Antonio's West Ham contract talks at a standstill

    While the top four hopes may be waning for Arsenal, they still have to try to finish as high as possible in the table. Within hours of the result, the West Ham board had issued a statement declaring "100 per cent faith" in the Croat.
    Pacers bring back Lance Stephenson to help stretch run

    Pacers bring back Lance Stephenson to help stretch run

    While Stephenson had a rocky first tour in IN, he is just 26 years old and is likely coming to the Pacers with something to prove. It's essentially only a one year deal as the first season will only be seven regular season games plus the postseason.
  • Bangladesh skipper Mashrafe Mortaza quits Twenty20 cricket

    Bangladesh skipper Mashrafe Mortaza quits Twenty20 cricket

    Some promotional offers make it possible to watch the all-cricket network, including Tuesday's Sri Lanka vs. Sri Lanka eased to a comfortable 6-wicket win in the first T20I at the R Premadasa Stadium, Colombo .
    After Health Care Fight, House Freedom Caucus Considers Next Steps

    After Health Care Fight, House Freedom Caucus Considers Next Steps

    Their tactics on health care prompted yet another call for party unity this week from House Speaker Paul Ryan. Noisy and united Democratic opposition to Trump's healthcare bill made it deeply unpopular in the electorate.

    US crude oil exports went to more destinations in 2016

    In the United States in particular, shale oil drillers have seized the opportunity to ramp up output and exports. May West Texas Intermediate crude rose 84 cents, or 1.7%, to settle at $50.35 a barrel.
  • Richmond Fed President Jeffrey Lacker resigns, admits to leaking confidential information

    Richmond Fed President Jeffrey Lacker resigns, admits to leaking confidential information

    The Richmond Fed said in a statement that Mr Lacker will be replaced in an acting capacity by first vice-president Mark Mullinix. The Richmond Fed is one of 12 regional reserve banks that are part of the USA central bank.
    Complete list of Jets' offseason program dates announced

    Complete list of Jets' offseason program dates announced

    However, no live contact is allowed, but this is where we begin to see the 7-on-7, 9-on-9 and full 11-on-11 drills and practices. This part of the offseason is voluntary, with player attendance under Chuck Pagano hovering over 90 percent in past years.
    Fire breaks out near world's tallest tower

    Fire breaks out near world's tallest tower

    Building and safety experts have cited a popular type of cladding covering the buildings that can be highly flammable. The site of the blaze was next to a 63-storey tower which was was heavily damaged in a fire on New Year's Eve in 2015.
  • Apple Reveals its Mac Pro, Display Plans and More

    Apple Reveals its Mac Pro, Display Plans and More

    That's why the company is working on a new line of iMacs that will debut at some point later this year. In the meantime, Apple has finally refreshed the current Mac Pro, albeit in a small way.

    NWS: Risk of Severe Thunderstorms Today

    Parts of the Landstown area saw damage, with roofs missing and chunks of siding pulled off homes, with contents spilling out. We will climb into the mid 80s Tuesday and Wednesday with a cold front bringing in a slight chance for rain Wednesday.

    Antonio could give West Ham boost ahead of Arsenal clash

    In his debut season, Bilic steered West Ham to a respectable seventh place finish. "Personally, my head is clear and I still have a job to do here.
popular