Fed Watching

Federal Reserve watching is keeping on top of current Fed thinking and predicting who the Fed will behave in the future1.

  • When watching Fed communication from the Federal Open Market Committee people pay attention when a traditionally dovish or hawkish member flips in the other direction1.

Federal Reserve Communication Options

  • FOMC Statement: carefully worded statement after the Federal Open Market Committee meeting that summarizes view on the economy and the actions it will take to achieve its mandate.
  • FOMC Press Conference: One hour chair press conference after the meeting. It is important because the chair is speaking more off the cuff and gives clues to sentiment
  • FOMC Minutes: released three week after the meeting takes place. Consists of reviews of the economic and financial conditions during inter-meeting period and then discusses the views of the FOMC for the outlook. The minutes often foreshadow policy moves in the coming months
  • FOMC “Dot Plot”: Economic projections on real economic growth, inflation, and unemployment rate. Each FOMC participant has a dot for their policy target range. The more consensus there is, the more the market will move.
  • Fed Official Speeches: official speeches from FOMC members
  • Fed Interviews: off-schedule interviews by important FOMC members are taken seriously and often given when the Fed feels the market has misunderstood. Additionally, the Fed Chair is interviewed bi-annually by Congress but this often repeats of other communications and perfunctory.
  • Desk Operating Statements: the operating policies and calendar for the Fed’s buying and selling of securities through it’s Desk
  • Fed Balance Sheet: the size of the Fed balance sheet can indicate interest direction (large sheet, lower rates in the future, higher asset values) and the composition can show which markets are strained
    • FIMA Accounts are ‘collaterized’ checking accounts structured as a Repo Transaction forieng official sector clients (governments and central banks)
  • Desk Surveys: market surveys for the Fed to determine the market sentiment
  • Fed Research: Research publications by the Fed which contain work products based on confidential information which can expose information about the markets.
  • Fed Surveys: market surveys for the Fed to determine economic conditions. Notable ones arre the Beige Book and the Senior Loan Officer Survey

References

1.
Wang, J. J. Central Banking 101. (Joseph, 2021).

Links to this note