Wed 21 Mar 2018


Shows:  watch Nightly Business Report. watch PBS NewsHour. watch Bloomberg Technology.
Special: watch Cambridge Analytica caught in undercover sting boasting about entrapping politicians. [Guardian News]
Special: watch Cambridge Analytica: Undercover Secrets of Trump’s Data Firm. [Channel 4 News]
Special: watch Did Cambridge Analytica play a role in the EU referendum? [BBC NewsNight]
Special: watch Zuckerberg Outlines Steps to Protect user Data. [Facebook]
Indices: chart Market Today. Market (52 weeks). Portfolio (52 weeks).
FX:        chart USD Today. USD Year. AUD Today. AUD Year.


In Portfolioticker today

read_this Hey Jarvis, how did we go today?

Today at the stock market

bull/bearU.S. stocks ended slightly lower on Wednesday, with major indexes giving up gains in choppy trade after the Federal Reserve raised U.S. interest rates, while a strong gain in the energy space helped limit losses.

  • The S&P 500 fell 5.01 points, or 0.18%, to 2,711.93.
  • The Dow Jones Industrial Average fell 44.96 points, or 0.18%, to end at 24,682.31.
  • The Nasdaq Composite .IXIC dropped 19.02 points, or 0.26%, to 7,345.29.
  • Advancing issues outnumbered declining ones on the NYSE by a 1.35-to-1 ratio; on Nasdaq, a 1.49-to-1 ratio favored advancers.
  • Volume on U.S. exchanges was 6.72 billion shares, compared to the 7.16 billion average over the last 20 trading days.

Monetary Policy

The Fed raised interest rates and forecast at least 2 more hikes for 2018, signalling growing confidence that U.S. tax cuts and government spending will boost the economy and inflation and lead to more aggressive future tightening.

The hike was widely expected, and new Fed Chairman Jerome Powell said in a news conference after the rate-hike announcement that the U.S. central bank was trying to take the “middle ground” in raising rates.

“That’s a Fed that really feels good about the economy, not only this year but into next year,” said Jim Paulsen, Chief Investment Strategist at The Leuthold Group in Minneapolis. “The initial response by equities was to go up because of the confidence the Fed seems to have in the economy. But with bond yields going up in anticipation of more hikes …, that kind of scared the stock market again.”

Financials, which benefit from a higher rate environment, briefly extended gains in the wake of the announcement but lost ground to close down 0.03%. Names sensitive to higher rates such as utilities, down 0.39 %, and real estate, down 0.93%, were under pressure.

Stocks were choppy following the Fed announcement, as yields on the 10-year U.S. Treasury note US10YT=RR moved closer to 3 percent, touching a one month high of 2.936 percent.

Markets participants are still trying to decipher the number of rate hikes this year – whether the Fed will stay at three increases as previously forecast by policy makers, or whether a fourth hike is possible.

Social Media

Facebook shares gained 0.74% to stem its recent sell-off over the past 2 days, which cost the social media company about $50 billion in market value after reports of data misuse that raised broader questions about consumer privacy and the need for tougher regulation.

The company chief executive, Mark Zuckerberg, said Facebook “made mistakes” in a statement.

Other

General Mills fell 8.85% after the company cut its full-year profit forecast due to higher freight and commodity costs. That weighed on other food companies, with Kellogg down 3.9%, JM Smucker down 4.20% and ConAgra down 2.9%.

Southwest Airlines fell 4.79% after the carrier cut its forecast for a key revenue metric. Other airlines also fell, with the NYSE Arca Airline index down 1.09%.

Energy rose 2.63%t and helped lift equities for a second straight session. Crude oil prices hit a 6-week high after a surprise decline in U.S. inventories and as concern persisted over possible disruption to Middle East supply.Reuters

Market indices

Market indices
^ Market indices today (mouseover for 12 month view) Chart: Yahoo Finance

Index Ticker Today Change 31 Dec 17 YTD
S&P 500 SPX (INX) 2,711.93 -0.19% 2,673.61 +1.43%
DJIA INDU 24,682.31 -0.19% 24,719.22 -0.15%
NASDAQ IXIC 7,345.28 -0.26% 6,903.39 +6.40

Portfolio Indices

USD and AUD denominated indices over the past 52 weeks (Chart: Bunting)
^ USD and AUD denominated indices over the past 52 weeks Chart: Bunting

Index values

Index Currency Today Change 31 Dec 17 YTD
USD-denominated Index USD 3.235 -1.51% 3.068 +5.45%
Valuation Rate USD/AUD 0.78179 +1.10% 0.78528 -0.45%
AUD-denominated Index AUD 4.14 -2.57% 3.909 +5.91%

Portfolio stock prices

Stock Ticker Today Change 31 Dec 17 YTD
Alphabet A GOOGL $1,094.00 -0.17% $1,053.00 +3.89%
Alphabet C GOOG $1,090.88 -0.63% $1,045.65 +4.32%
Apple AAPL $171.27 -2.27% $169.23 +1.20%
Amazon AMZN $1,581.86 -0.30% $1,169.54 +35.25%
Ebay EBAY $41.67 -0.70% $37.76 +10.35%
Facebook FB $169.39 +0.73% $176.46 -4.01%
PayPal PYPL $81.04 +0.22% $73.61 +10.09%
Twitter TWTR $32.73 +4.40% $24.01 +36.31%
Visa V $123.22 -1.36% $114.02 +8.06%
VMware VMW $124.35 -1.44% $125.32 -0.78%

FX: USD/AUD

USD

DXY movements
^ Bloomberg Dollar Spot Index (DXY) movements today (mouseover for 12 month view) Chart: Bloomberg

The Bloomberg Dollar Spot Index (DXY) fell 0.9%, the largest drop since Jan 2018.
The EUR rose 0.8% to USD 1.2340.
The British GBP rose 1.1% to USD 1.4145.
The Japanese JPY rose 0.6% to 105.91 per USD.
The MSCI Emerging Markets Currency Index rose 0.1%.

The yield on 10-year Treasuries fell 1 basis point to 2.88%, while two-year yields dropped 5 basis points to 2.30%.
Germany’s 10-year yield advanced 1 basis point to 0.59%, the highest in more than a week.
Britain’s 10-year yield climbed 4 basis points to 1.53%, close to the highest in more than 3 weeks on the largest increase in more than 3 weeks.
Bloomberg

AUD

AUD movements
^ AUD movements against the USD today (mouseover for 12 month view) Chart: xe.com

Oil and Gas Futures

Futures prices

Prices are as at 15:48 EDT

  • NYMEX West Texas Intermediate (WTI): $65.50/barrel +3.08% Chart
  • ICE (London) Brent North Sea Crude: $69.82/barrel +3.56% Chart
  • NYMEX Natural gas futures: $2.65/MMBTU -0.97% Chart

Mark Zuckerberg’s Statement on “The Cambridge Analytica Situation”

I want to share an update on the Cambridge Analytica — including the steps we’ve already taken and our next steps to address this important issue.

We have a responsibility to protect your data, and if we can’t then we don’t deserve to serve you. I’ve been working to understand exactly what happened and how to make sure this doesn’t happen again. The good news is that the most important actions to prevent this from happening again today we have already taken years ago. But we also made mistakes, there’s more to do, and we need to step up and do it.

Here’s a timeline of the events:

In 2007, we launched the Facebook Platform with the vision that more apps should be social. Your calendar should be able to show your friends’ birthdays, your maps should show where your friends live, and your address book should show their pictures. To do this, we enabled people to log into apps and share who their friends were and some information about them.

In 2013, a Cambridge University researcher named Aleksandr Kogan created a personality quiz app. It was installed by around 300,000 people who shared their data as well as some of their friends’ data. Given the way our platform worked at the time this meant Kogan was able to access tens of millions of their friends’ data.

In 2014, to prevent abusive apps, we announced that we were changing the entire platform to dramatically limit the data apps could access. Most importantly, apps like Kogan’s could no longer ask for data about a person’s friends unless their friends had also authorized the app. We also required developers to get approval from us before they could request any sensitive data from people. These actions would prevent any app like Kogan’s from being able to access so much data today.

In 2015, we learned from journalists at The Guardian that Kogan had shared data from his app with Cambridge Analytica. It is against our policies for developers to share data without people’s consent, so we immediately banned Kogan’s app from our platform, and demanded that Kogan and Cambridge Analytica formally certify that they had deleted all improperly acquired data. They provided these certifications.

Last week, we learned from The Guardian, The New York Times and Channel 4 that Cambridge Analytica may not have deleted the data as they had certified. We immediately banned them from using any of our services. Cambridge Analytica claims they have already deleted the data and has agreed to a forensic audit by a firm we hired to confirm this. We’re also working with regulators as they investigate what happened.

This was a breach of trust between Kogan, Cambridge Analytica and Facebook. But it was also a breach of trust between Facebook and the people who share their data with us and expect us to protect it. We need to fix that.

In this case, we already took the most important steps a few years ago in 2014 to prevent bad actors from accessing people’s information in this way. But there’s more we need to do and I’ll outline those steps here:

First, we will investigate all apps that had access to large amounts of information before we changed our platform to dramatically reduce data access in 2014, and we will conduct a full audit of any app with suspicious activity. We will ban any developer from our platform that does not agree to a thorough audit. And if we find developers that misused personally identifiable information, we will ban them and tell everyone affected by those apps. That includes people whose data Kogan misused here as well.

Second, we will restrict developers’ data access even further to prevent other kinds of abuse. For example, we will remove developers’ access to your data if you haven’t used their app in 3 months. We will reduce the data you give an app when you sign in — to only your name, profile photo, and email address. We’ll require developers to not only get approval but also sign a contract in order to ask anyone for access to their posts or other private data. And we’ll have more changes to share in the next few days.

Third, we want to make sure you understand which apps you’ve allowed to access your data. In the next month, we will show everyone a tool at the top of your News Feed with the apps you’ve used and an easy way to revoke those apps’ permissions to your data. We already have a tool to do this in your privacy settings, and now we will put this tool at the top of your News Feed to make sure everyone sees it.

Beyond the steps we had already taken in 2014, I believe these are the next steps we must take to continue to secure our platform.

I started Facebook, and at the end of the day I’m responsible for what happens on our platform. I’m serious about doing what it takes to protect our community. While this specific issue involving Cambridge Analytica should no longer happen with new apps today, that doesn’t change what happened in the past. We will learn from this experience to secure our platform further and make our community safer for everyone going forward.

I want to thank all of you who continue to believe in our mission and work to build this community together. I know it takes longer to fix all these issues than we’d like, but I promise you we’ll work through this and build a better service over the long term.” Mark Zuckerberg, 21 Mar 2018 Facebook

Related News

Right of Reply: Kogan

flag_usa US: Existing-Home Sales. Feb 2018

Press Release Extract [us_realestate]

Despite consistently low inventory levels and faster price growth, existing-home sales bounced back in February after two straight months of declines, according to the National Association of Realtors®. Sizeable sales increases in the South and West offset declines in the Northeast and Midwest.

Total existing-home sales, which are completed transactions that include single-family homes, townhomes, condominiums and co-ops, grew 3.0 percent to a seasonally adjusted annual rate of 5.54 million in February from 5.38 million in January. After last month’s increase, sales are now 1.1 percent above a year ago.

Lawrence Yun, NAR chief economist, says sales were uneven across the country in February but did increase nicely overall. “A big jump in existing sales in the South and West last month helped the housing market recover from a two-month sales slump,” he said. “The very healthy U.S. economy and labor market are creating a sizeable interest in buying a home in early 2018. However, even as seasonal inventory gains helped boost sales last month, home prices – especially in the West – shot up considerably. Affordability continues to be a pressing issue because new and existing housing supply is still severely subpar.”

Added Yun, “The unseasonably cold weather to start the year muted pending sales in the Northeast and Midwest in January and ultimately led to their sales retreat last month. Looking ahead, several markets in the Northeast will likely see even more temporary disruptions from the large winter storms that have occurred in March.”

The median existing-home price for all housing types in February was $241,700, up 5.9 percent from February 2017 ($228,200). February’s price increase marks the 72nd straight month of year-over-year gains.

Total housing inventory at the end of February rose 4.6 percent to 1.59 million existing homes available for sale, but is still 8.1 percent lower than a year ago (1.73 million) and has fallen year-over-year for 33 consecutive months. Unsold inventory is at a 3.4-month supply at the current sales pace (3.8 months a year ago).

According to Freddie Mac, the average commitment rate (link is external) for a 30-year, conventional, fixed-rate mortgage moved higher for the fifth straight month to 4.33 percent in February (highest since 4.34 percent in April 2014) from 4.03 percent in January. The average commitment rate for all of 2017 was 3.99 percent.

Properties typically stayed on the market for 37 days in February, which is down from 41 days in January and 45 days a year ago. Forty-six percent of homes sold in February were on the market for less than a month.

“Mortgage rates are at their highest level in nearly four years, at a time when home prices are still climbing at double the pace of wage growth,” said Yun. “Homes for sale are going under contract a week faster than a year ago, which is quite remarkable given weakening affordability conditions and extremely tight supply. To fully satisfy demand, most markets right now need a substantial increase in new listings.”

Realtor.com®’s Market Hotness Index , measuring time-on-the-market data and listings views per property, revealed that the hottest metro areas in February were San Francisco-Oakland-Hayward, Calif.; Midland, Texas; Vallejo-Fairfield, Calif.; San Jose-Sunnyvale-Santa Clara, Calif.; and Sacramento-Roseville-Arden-Arcade, Calif.

First-time buyers were 29 percent of sales in February, which is unchanged from last month and down from 31 percent a year ago. NAR’s 2017 Profile of Home Buyers and Sellers – released in late 2017 – revealed that the annual share of first-time buyers was 34 percent.

NAR President Elizabeth Mendenhall says first-time buyers are seeing stiff competition for the available listings in their price range. “Realtors® in several markets note that entry-level homes for first-timers are hard to come by, which is contributing to their underperforming share of overall sales to start the year.” she said. “Prospective buyers should start conversations with a Realtor® now on what they want in a new home. Even with the expected uptick in new listings in coming months, buyers in most markets will likely have to act fast on any available listing that checks all their boxes.”

All-cash sales were 24 percent of transactions in February, which is up from 22 percent in January and the highest since last February (27 percent). Individual investors, who account for many cash sales, purchased 15 percent of homes in February, which is down from 17 percent in January and unchanged from a year ago.

Distressed sales – foreclosures and short sales – were 4 percent of sales in February, down from 5 percent in January and 7 percent a year ago. Three percent of February sales were foreclosures and 1 percent were short sales.

Single-family and Condo/Co-op Sales

Single-family home sales rose 4.2 percent to a seasonally adjusted annual rate of 4.96 million in February from 4.76 million in January, and are now 1.8 percent above the 4.87 million pace a year ago. The median existing single-family home price was $243,400 in February, up 5.9 percent from February 2017.

Existing condominium and co-op sales declined 6.5 percent to a seasonally adjusted annual rate of 580,000 units in February, and are now 4.9 percent below a year ago. The median existing condo price was $227,300 in February, which is 5.7 percent above a year ago.

Regional Breakdown

February existing-home sales in the Northeast fell 12.3 percent to an annual rate of 640,000, and are now 7.2 percent below a year ago. The median price in the Northeast was $258,900, which is 3.6 percent above February 2017.

In the Midwest, existing-home sales dipped 2.4 percent to an annual rate of 1.22 million in February (unchanged from a year ago). The median price in the Midwest was $179,400, up 4.5 percent from a year ago.

Existing-home sales in the South jumped 6.6 percent to an annual rate of 2.41 million in February, and are now 3.4 percent above a year ago. The median price in the South was $215,700, up 5.4 percent from a year ago.

Existing-home sales in the West surged 11.4 percent to an annual rate of 1.27 million in February, and are now 2.4 percent above a year ago. The median price in the West was $370,600, up 9.6 percent from February 2017.

National Association of Realtors, “Existing-Home Sales. Feb 2018“, 21 Mar 2018 More

flag_usa US: International Transactions: Q4/2017 and Year 2017

Press Release Extract [us_trade]

Current-Account Balance, Fourth Quarter

The U.S. current-account deficit increased to $128.2 billion (preliminary) in the fourth quarter of 2017 from $101.5 billion (revised) in the third quarter, according to statistics released by the Bureau of Economic Analysis (BEA). The deficit was 2.6 percent of current-dollar gross domestic product (GDP) in the fourth quarter, up from 2.1 percent in the third quarter.

us_ca_q_20180321

The $26.7 billion increase in the current-account deficit mostly reflected increases in the deficits on goods and secondary income and a decrease in the surplus on primary income.

Current-Account Transactions, Fourth Quarter

Exports of goods and services and income receipts

Exports of goods and services and income receipts increased $16.6 billion in the fourth quarter to $878.8 billion.

  • Goods exports increased $14.2 billion to $400.7 billion, mostly reflecting an increase in industrial supplies and materials, primarily petroleum and products.
  • Primary income receipts increased $6.0 billion to $243.9 billion, mostly reflecting increases in direct investment income and in portfolio investment income.
  • Secondary income receipts decreased $5.9 billion to $35.3 billion, partly offsetting the increases in goods exports and in primary income receipts. The decrease in secondary income receipts mostly reflected a decrease in U.S. government transfers, primarily fines and penalties.

us_cat_q_20180321

Imports of goods and services and income payments

Imports of goods and services and income payments increased $43.3 billion to $1,006.9 billion.

  • Goods imports increased $33.1 billion to $614.9 billion, mostly reflecting increases in industrial supplies and materials, primarily petroleum and products, and in consumer goods except food and automotive.
  • Primary income payments increased $7.3 billion to $186.7 billion, primarily reflecting an increase in direct investment income.

Capital Account, Fourth Quarter

The balance on the capital account shifted to a deficit of less than $0.1 billion in the fourth quarter from a surplus of $24.9 billion in the third quarter. The third-quarter transactions reflected receipts from foreign insurance companies for losses resulting from hurricanes Harvey, Irma, and Maria. For more information, see “What are the effects of hurricanes and other disasters on the international economic accounts?”

Financial Account, Fourth Quarter

Net U.S. borrowing measured by financial-account transactions was $29.8 billion in the fourth quarter, a decrease from net borrowing of $121.8 billion in the third quarter.

Financial assets

Net U.S. acquisition of financial assets excluding financial derivatives decreased $172.8 billion to $177.9 billion.

  • Net U.S. acquisition of portfolio investment assets decreased $95.9 billion to $83.3 billion, reflecting a shift to net U.S. sales of foreign equity and investment fund shares from third- quarter net purchases.
  • Transactions in other investment assets shifted to net U.S. liquidation of $10.7 billion in the fourth quarter from net acquisition of $74.7 billion in the third quarter, mostly reflecting a shift to net foreign repayment of loans from third-quarter net U.S. provision of loans to foreigners.

Liabilities

Net U.S. incurrence of liabilities excluding financial derivatives decreased $282.6 billion to $208.4 billion.

  • Net U.S. incurrence of portfolio investment liabilities decreased $211.5 billion to $84.9 billion, reflecting a decrease in net foreign purchases of U.S. long-term debt securities and a shift to net foreign sales of U.S. equity and investment fund shares from third-quarter net foreign purchases.
  • Net U.S. incurrence of direct investment liabilities decreased $49.6 billion to $54.1 billion, primarily reflecting a shift to net U.S. repayment of debt instrument liabilities from third-quarter net incurrence.
  • Net U.S. incurrence of other investment liabilities decreased $21.4 billion to $69.5 billion, reflecting largely offsetting changes in transactions in loan and deposit liabilities. In loans, transactions shifted to net U.S. repayment of loan liabilities from third-quarter net incurrence. In deposits, transactions shifted to net incurrence of deposit liabilities from third-quarter net foreign withdrawal of deposits in the United States.

Financial derivatives

Transactions in financial derivatives other than reserves reflected fourth-quarter net lending of $0.8 billion, a decrease of $17.8 billion from the third quarter.

Statistical Discrepancy, Fourth Quarter

The statistical discrepancy was $98.4 billion in the fourth quarter, after a statistical discrepancy of −$45.2 billion in the third quarter.

Current-Account Balance, Year 2017

The current-account deficit increased to $466.2 billion (preliminary) in 2017 from $451.7 billion in 2016. The deficit was 2.4 percent of current-dollar GDP in 2017, the same percentage as in 2016.

The $14.6 billion increase in the deficit reflected a $58.7 billion increase in the deficit on goods and a $4.9 billion decrease in the surplus on services that were partly offset by a $43.8 billion increase in the surplus on primary income and a $5.3 billion decrease in the deficit on secondary income.

Current-Account Transactions, Year 2017

Exports of goods and services and income receipts

Exports of goods and services and income receipts increased $250.9 billion in 2017 to $3,408.2 billion.

  • Primary income receipts increased $112.9 billion to $926.9 billion, led by an increase in direct investment income.
  • Goods exports increased $95.0 billion to $1,550.7 billion, led by an increase in industrial supplies and materials.
  • Services exports increased $28.5 billion to $780.9 billion, led by increases in other business services and in financial services.

Imports of goods and services and income payments

Imports of goods and services and income payments increased $265.5 billion to $3,874.4 billion.

  • Goods imports increased $153.7 billion to $2,361.9 billion, led by increases in industrial supplies and materials and in capital goods except automotive.
  • Primary income payments increased $69.1 billion to $709.9 billion, led by increases in portfolio investment income and in other investment income.
  • Services imports increased $33.5 billion to $538.1 billion, led by increases in travel (for all purposes including education) and in other business services.

Capital Account, Year 2017

Capital transfer receipts were $24.9 billion in 2017. The transactions reflected receipts from foreign insurance companies for losses resulting from hurricanes Harvey, Irma, and Maria.

Financial Account, Year 2017

Net U.S. borrowing measured by financial-account transactions was $349.2 billion in 2017, a decrease from net borrowing of $377.7 billion in 2016.

Financial assets

Net U.S. acquisition of financial assets excluding financial derivatives increased $864.5 billion to $1,212.4 billion.

  • Net U.S. acquisition of portfolio investment assets increased $548.9 billion to $589.5 billion, reflecting increases in net U.S. purchases of foreign debt securities and in net purchases of foreign equity and investment fund shares.
  • Transactions in other investment assets shifted to net U.S. acquisition of $200.1 billion in 2017 from net liquidation of $6.4 billion in 2016, primarily reflecting a shift to net U.S. acquisition of foreign deposits in 2017 from net withdrawal in 2016.
  • Net U.S. acquisition of direct investment assets increased $112.8 billion to $424.4 billion, reflecting a shift to net U.S. acquisition of debt instruments in 2017 from net foreign repayment in 2016 and an increase in net acquisition of equity assets.

Liabilities

Net U.S. incurrence of liabilities excluding financial derivatives increased $846.5 billion to $1,587.9 billion.

  • Net U.S. incurrence of portfolio investment liabilities increased $599.7 billion to $837.1 billion, reflecting a shift to net foreign purchases of U.S. equity and investment fund shares in 2017 from net foreign sales in 2016 and an increase in net foreign purchases of U.S. long-term debt securities.
  • Net U.S. incurrence of other investment liabilities increased $377.6 billion to $402.2 billion, reflecting a shift to net U.S. incurrence of deposit liabilities in 2017 from net foreign withdrawal in 2016 and a shift to net U.S. incurrence of loan liabilities in 2017 from net repayment in 2016.
  • Net U.S. incurrence of direct investment liabilities decreased $130.7 billion to $348.7 billion, partly offsetting the increases in net U.S. incurrence of portfolio investment liabilities and other investment liabilities. The decrease in net U.S. incurrence of direct investment liabilities reflected decreases in net incurrence of debt instrument liabilities and equity liabilities.

Financial derivatives

Transactions in financial derivatives other than reserves reflected net lending of $26.4 billion in 2017, an increase of $10.5 billion from 2016.

Statistical Discrepancy, Year 2017

The statistical discrepancy increased $18.1 billion in 2017 to $92.2 billion.

Bureau of Economic Analysis, “U.S. International Transactions 4th quarter and Year 2017“, 21 Mar 2018 (08:30) More

flag_usa US: FOMC Monetary Policy

us_fed_powell_20180321

Press Release Extract [us_fomc]

Information received since the Federal Open Market Committee met in January indicates that the labor market has continued to strengthen and that economic activity has been rising at a moderate rate. Job gains have been strong in recent months, and the unemployment rate has stayed low. Recent data suggest that growth rates of household spending and business fixed investment have moderated from their strong fourth-quarter readings. On a 12-month basis, both overall inflation and inflation for items other than food and energy have continued to run below 2 percent. Market-based measures of inflation compensation have increased in recent months but remain low; survey-based measures of longer-term inflation expectations are little changed, on balance.

Consistent with its statutory mandate, the Committee seeks to foster maximum employment and price stability. The economic outlook has strengthened in recent months. The Committee expects that, with further gradual adjustments in the stance of monetary policy, economic activity will expand at a moderate pace in the medium term and labor market conditions will remain strong. Inflation on a 12-month basis is expected to move up in coming months and to stabilize around the Committee’s 2 percent objective over the medium term. Near-term risks to the economic outlook appear roughly balanced, but the Committee is monitoring inflation developments closely.

In view of realized and expected labor market conditions and inflation, the Committee decided to raise the target range for the federal funds rate to 1½ to 1¾ percent. The stance of monetary policy remains accommodative, thereby supporting strong labor market conditions and a sustained return to 2 percent inflation.

In determining the timing and size of future adjustments to the target range for the federal funds rate, the Committee will assess realized and expected economic conditions relative to its objectives of maximum employment and 2 percent inflation. This assessment will take into account a wide range of information, including measures of labor market conditions, indicators of inflation pressures and inflation expectations, and readings on financial and international developments. The Committee will carefully monitor actual and expected inflation developments relative to its symmetric inflation goal. The Committee expects that economic conditions will evolve in a manner that will warrant further gradual increases in the federal funds rate; the federal funds rate is likely to remain, for some time, below levels that are expected to prevail in the longer run. However, the actual path of the federal funds rate will depend on the economic outlook as informed by incoming data.

Decisions Regarding Monetary Policy Implementation

The Federal Reserve has made the following decisions to implement the monetary policy stance announced by the Federal Open Market Committee in its statement on March 21, 2018:

  • The Board of Governors of the Federal Reserve System voted unanimously to raise the interest rate paid on required and excess reserve balances to 1.75 percent, effective March 22, 2018.
  • As part of its policy decision, the Federal Open Market Committee voted to authorize and direct the Open Market Desk at the Federal Reserve Bank of New York, until instructed otherwise, to execute transactions in the System Open Market Account in accordance with the following domestic policy directive:

    “Effective March 22, 2018, the Federal Open Market Committee directs the Desk to undertake open market operations as necessary to maintain the federal funds rate in a target range of 1½ to 1¾ percent, including overnight reverse repurchase operations (and reverse repurchase operations with maturities of more than one day when necessary to accommodate weekend, holiday, or similar trading conventions) at an offering rate of 1.50 percent, in amounts limited only by the value of Treasury securities held outright in the System Open Market Account that are available for such operations and by a per-counterparty limit of $30 billion per day.

    The Committee directs the Desk to continue rolling over at auction the amount of principal payments from the Federal Reserve’s holdings of Treasury securities maturing during March that exceeds $12 billion, and to continue reinvesting in agency mortgage-backed securities the amount of principal payments from the Federal Reserve’s holdings of agency debt and agency mortgage-backed securities received during March that exceeds $8 billion. Effective in April, the Committee directs the Desk to roll over at auction the amount of principal payments from the Federal Reserve’s holdings of Treasury securities maturing during each calendar month that exceeds $18 billion, and to reinvest in agency mortgage-backed securities the amount of principal payments from the Federal Reserve’s holdings of agency debt and agency mortgage-backed securities received during each calendar month that exceeds $12 billion. Small deviations from these amounts for operational reasons are acceptable.

    The Committee also directs the Desk to engage in dollar roll and coupon swap transactions as necessary to facilitate settlement of the Federal Reserve’s agency mortgage-backed securities transactions.”

  • In a related action, the Board of Governors of the Federal Reserve System voted unanimously to approve a ¼ percentage point increase in the primary credit rate to 2.25 percent, effective March 22, 2018. In taking this action, the Board approved requests to establish that rate submitted by the Boards of Directors of the Federal Reserve Banks of Boston, New York, Philadelphia, Cleveland, Richmond, Atlanta, St. Louis, Kansas City, Dallas, and San Francisco.

This information will be updated as appropriate to reflect decisions of the Federal Open Market Committee or the Board of Governors regarding details of the Federal Reserve’s operational tools and approach used to implement monetary policy.

US Federal Reserve, “FOMC Monetary Policy“, 21 Mar 2018 (14:00) More

Dot Plot

fomc_dotplot_20180321

US Federal Reserve, “Economic projections of Federal Reserve Board members and Federal Reserve bank presidents under their individual assessments of projected appropriate monetary policy, Mar 2018“, 21 Mar 2018 (14:00) More

flag_japan Japan update

Currency: USD/JPY

JPY movements
^ JPY movements against the USD over the past month (mouseover for inverse) Chart: xe.com

Stockmarket: Nikkei 225

nagasaki_flowers

The Japan Exchange Group (Tokyo and Osaka Exchanges) is closed for the Vernal Equinox (Shunbun no Hi, formerly Shunki kōreisai) public holiday, generally used for family togetherness and maintenance of family grave sites.

flag_china China update

Currency: USD/CNY

CNY movements
^ CNY movements against the USD over the past month (mouseover for inverse) Chart: xe.com

Stockmarket: CSI300

CSI300 movements
^ Shanghai CSI300 movements over the past week Chart: Google Finance