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- New York Times quotes Diane Swonk on jobs outlook 04.19.2013
Bloomberg asks Diane Swonk to explain Fed concern over unemployment
03.08.2013- Marketplace radio calls on Adolfo Laurenti for European analysis 02.26.2013
- Financial Times asks Diane Swonk about Fed caution 01.30.2013
- CNBC Asia turns to Adolfo Laurenti for European expertise
01.10.2013
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- New York Times quotes Diane Swonk on jobs outlook 04.19.2013
- Bloomberg asks Diane Swonk to explain Fed concern over unemployment
03.08.2013
- Marketplace radio calls on Adolfo Laurenti for European analysis 02.26.2013
- Financial Times asks Diane Swonk about Fed caution 01.30.2013
- CNBC Asia turns to Adolfo Laurenti for European expertise
01.10.2013
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Founded in 1937, Mesirow Financial is a diversified financial services firm headquartered in Chicago. We are an employee-owned, private company with approximately 1,200 employees globally.
Founded in 1937, Mesirow Financial is a diversified financial services firm headquartered in Chicago. We are an employee-owned, private company with approximately 1,200 employees globally.
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Mesirow Financial understands, anticipates
and meets the financial needs of its clients – institutions, public sector entities, corporations and individuals – with a multitude of
high-quality products and services.
Mesirow Financial understands, anticipates
and meets the financial needs of its clients – institutions, public sector entities, corporations and individuals – with a multitude of
high-quality products and services.
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Phone: +1 312.595.6000
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Chicago, IL 60654 (Map & Directions)
Phone: +1 312.595.6000
Toll Free: +1 800.453.0600
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Fed Downgrades Forecast, Offers Twist 2.0
The Federal Open Market Committee (FOMC) voted to extend “Operation Twist,”which is providing support for both the Treasury and the mortgage markets. The Federal Reserve committed to continue to expand the duration of its portfolio, swapping out Treasuries of up to three years in maturity for six- to thirty-year bonds. The Fed has committed to sell $267 billion in shorter-duration Treasury debt, which will keep the program going through year-end. The Fed also agreed to continue to reinvest its maturing portfolio of mortgage-backed securities (MBS). This will help to provide support for the mortgage market, which is critical given the potential runoff in the Fed’s balance sheet associated with the recent surge in refinancing (i.e., the mortgage market would have effectively been tightened if the Fed had not extended its reinvestment program in MBS).
The Fed also reassured markets that it was prepared to do more if necessary, because of a downgrade to both current and future economic conditions. The Fed will release its updated forecasts at 2 p.m. EST, which will no doubt show weaker growth through 2012 and 2013, as well as a higher unemployment rate. Somewhat surprising is the fact that the Fed held its expectations for a rate hike to late 2014, despite the downgrade to growth. This leaves additional communications as a tool for the future. There is also a problem of continuity, as Ben Bernanke’s term as Chairman expires in early 2014 and it is unclear how the Fed will handle communications if his replacement is someone who has criticized such policies. The vote today was not unanimous; Richmond Fed President Jeffrey Lacker dissented again, reflecting his and non-voting members discomfort with current policy.
Bottom Line: The Fed is continuing its policy of easy money by providing an anchor on rates and ongoing support for the mortgage market. It has wisely kept its powder dry on additional quantitative easing; the biggest impact of such easing tends to be in or on the brink of a full-blown crisis. Unfortunately, the Fed will likely have to engage in a third round of quantitative easing (QE3) prior to year-end.