News — government

Lessons and Reactions From The Federal Reserve’s June Policy Statement

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By John McDonald  On June 19, 2019, the United States Federal Reserve Board of Governors released a policy statement based on the recent meeting of the Federal Open Market Committee. Market reaction was swift and substantial. Nearly immediately, the yield on the 10-year Treasury Note fell below 2% since November of 2016. CNBC describes 2% as “a key psychological level”, though such language is, at best, nebulous. Regardless of the “psychological significance” of the fact that the 10-year note dropped below 2%, substantial downside moves in that key interest rate can absolutely have a serious impact on everyday financial issues...

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President Explored Removing Fed Chair in Early 2019

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By John McDonald Jerome Powell has served as the chair of the Federal Reserve since February 2018, and President Trump celebrated the first anniversary of Powell’s appointment to the position by exploring options for having him removed from the office.  According to “people familiar with the matter” who serve as sources for Bloomberg, the White House counsel’s office examined the legality of stripping Powell of his chairmanship.  The move would have left him a Fed governor, but no longer the chair of the Fed. Once that was done, Powell could conceivably have been replaced with another sitting Fed governor. Ultimately,...

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Can the U.S. Government Help the President Prevent a Recession?

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By John McDonald With recent economic news pointing the country toward higher recession risks, some analysts are skeptical that the president and the Fed will be able to boost the national economy enough to completely avoid a downturn. With only 75,000 new jobs added in May (compared to an average 223,000 per month in 2018) and controversial trade policies toward China and Mexico, the national economy could be feeling the effects of a relatively tepid first half of 2019. Federal Reserve chair Jerome Powell addressed the matter head-on in early June, announcing that the Fed would likely not raise interest...

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Chinese Sale of U.S. Treasury Bonds Indicates Commitment to Trade Conflict

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By John McDonald China has been selling off U.S. Treasury bonds for several years now, causing a vague unease among many U.S. investors. With a trade conflict between the two countries well under way, China’s reduction of its bonds by about 4 percent in 2018 and its ongoing sale of the bonds in 2019 has many “talking heads” talking about a trade-war “nuclear option” for China: dumping its U.S. Treasury debts. “This is really the biggest weapon they have,” said Loyola Marymount economics professor Sung Won Sohn in a recent interview on CNBC. “If push comes to shove, that is what...

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