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Retired chief investment officer and former NYSE firm partner with 50 plus years experience in field as analyst / economist, portfolio manager / trader, and CIO who has superb track record with multi $billion equities and fixed income portfolios. Advanced degrees, CFA. Having done much professional writing as a young guy, I now have a cryptic style. 40 years down on and around The Street confirms: CAVEAT EMPTOR IN SPADES !!!

Wednesday, June 28, 2006

Monetary Policy

The FOMC is widely expected to raise the FFR% another 25
basis points to 5.25% tomorrow, 6/29. The cyclical case
for higher short term rates is still in place based on data
at hand. However, with the leading economic indicators
now signaling more modest growth ahead, a further increase
or hikes to the FFR% cannot be taken for granted beyond
this end-of-June meeting. The Fed will have a battery
of flash reports for economic activity in June to look
over at the meeting, and this fresh data can be expected
to color comments released with the rate decision.

On the liquidity front, the FOMC has tamed the Greenspan
volatilty in the Fed.'s portfolio and in the monetary base,
with both now trending in line with a shift of restrictive to
neutral. This is a favorable development from a tactical
point of view.

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