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Central Bank Monitor
 

Central Bank Monitor

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Central Bank Monitor

Central Bank Monitor
Bloomberg BRIEF: Economics
Joseph Brusuelas, Robert Lawrie and
Michael McDonough
October 2012

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    Central Bank Monitor Central Bank Monitor Presentation Transcript

    • Sample Presentation from Bloomberg Brief Newsletter – Take a Trial at Bloombergbriefs.comImage page Central Bank Monitor Bloomberg BRIEF: Economics Joseph Brusuelas, Robert Lawrie and Michael McDonough October 2012
    • Take free trial at bloombergbriefs.comBloomberg Economic Brief Central Bank MonitorImage page Summary Executive • Fed will likely remain on hold at October 2012 meeting • Forward guidance to remain unchanged. • Discussion in committee will probably revolve around • Efficacy of open-ended MBS purchases. • Whether to continue Operation Twist II into 2013. • Restarting treasury purchase program at December 2012 meeting. 2
    • Take free trial at bloombergbriefs.comBloomberg Economic Brief Central Bank MonitorExecutive Summary • Fed will likely move toward explicit targeting of unemployment rate over next six months. • Potential “Evans Rule” indicates central bank to remain aggressive. • Aggressive action to unclog monetary transmission mechanism to remain in place through 2013. • Balance sheet likely to expand to $4 trillion by end of 2013. 3
    • Take free trial at bloombergbriefs.comBloomberg Economic Brief Central Bank MonitorEvans Rule and Policy Guidance Taylor Rule & Evans Rule Estimates of the Fed Funds Rates 8 6 Taylor Rule 4 Fed Funds Rate Estimates 2 Percentage 0 Evans Rule -2 Estimates -4 -6 -8 -10 2007 2008 2009 2010 2011 2012 2013 2014 2015 Source: Bloomberg USFEDL01, PCE CYOY, USURTOT INDEX<GO> Email jbrusuelas3@bloomberg.net or call 212-617-7664 4
    • Take free trial at bloombergbriefs.comBloomberg Economic Brief Central Bank MonitorFed Policy Objective Mortgage Backed Primary-Secondary Spread 180 Starts of Fed QE3 160 QE1 MBS Purchase Programs 140 120 100 Basis Points 80 60 40 20 0 Mortgage Backed Primary-Secondary Spread -20 Jan-07 Jan-08 Jan-09 Jan-10 Jan-11 Jan-12 Source: Bloomberg ILM3NAVG, MTGEFNCL INDEX<GO> Email jbrusuelas3@bloomberg.net or call 212-617-7664 5
    • Take free trial at bloombergbriefs.comBloomberg Economic Brief Central Bank MonitorBalance Sheet Expanding The U.S. Unemployment Rate , Fed Holdings of Agency and Mortgage Backed Securities 11 2,500 Potential end of 10 purchases when unemployment hits 2,000 7%? Unemployment Rate (%) MBS Holdings (US$ bn) 9 1,500 8 Start of QE3 7 1,000 6 Start of 500 5 QE1 4 0 2008 2009 2010 2011 2012 2013 2014 2015 Fed Holdings of Agency & MBS Debt Projected Purchases Unemployment Rate Projections Source: Bloomberg Email jbrusuelas3@bloomberg.net or call 212-617-7664 6
    • Take free trial at bloombergbriefs.comBloomberg Economic Brief Central Bank MonitorBalance Sheet Expanding Federal Reserve Balance Sheet 3500 Start of QE3 3000 2500 IUS$ bn) 2000 Start of QE3 1500 Lehman Collapse 1000 500 2007 2008 2009 2010 2011 2012 Source: Bloomberg FARWRBC INDEX<GO> Email jbrusuelas3@bloomberg.net or call 212-617-7664 7
    • Take free trial at bloombergbriefs.comBloomberg Economic Brief Central Bank MonitorArterial Blockages Email jbrusuelas3@bloomberg.net or call 212-617-7664 8
    • Take free trial at bloombergbriefs.comBloomberg Economic Brief Central Bank MonitorNegative Rate Environment to Persist U.S. Nominal and Real Long-Term Interest Rates 12 10 8 6 Percentage 4 2 0 -2 -4 U.S. Real Fed Funds Rate U.S. Real 10-Year Interest Rate -6 1962 1967 1972 1977 1982 1987 1992 1997 2002 2007 2012 Source: Bloomberg USFEDL01, USGG10YR less CPI YOY INDEX<GO> Email jbrusuelas3@bloomberg.net or call 212-617-7664 9
    • Take free trial at bloombergbriefs.comBloomberg Economic Brief Central Bank MonitorMonetary Policy at the Zero Bound FOMC Projections of Year-End Levels of the Fed Funds Rate (Median Projections as of January, June and September 2012) 4.5% January Median FOMC Projection 4.00% 4.0% June Median FOMC Projection Sept. Median FOMC Projection 3.5% 3.0% Percent 2.5% 2.0% 1.5% 1.00% 1.0% 0.5% 0.25% 0.25% 0.25% 0.0% 2012 2013 2014 2015 Longer Run Source: Bloomberg Email jbrusuelas3@bloomberg.net or call 212-617-7664 10
    • Take free trial at bloombergbriefs.comBloomberg Economic Brief Central Bank MonitorWe have another 18 exclusive slides available.This presentation is usually only available to Bloomberg Economic Brief newslettersubscribers. Take a free trial today and we will be happy to send you the full presentation.To access the full presentation contact us at:Agustavson@bloomberg.netOr call me on +1 212 617 0544Annie Email jbrusuelas3@bloomberg.net or call 212-617-7664 11
    • Bloomberg Joseph Brusuelas, Senior Economist Bloomberg, LP jbrusuelas3@bloomberg.net Joseph Brusuelas, Robert Lawrie and Michael McDonough are economists who write for the Bloomberg Economic Brief. The observations they make are their own. Bloomberg is a leading source of data, news, and analytics for financial and legal professionals, corporations, media organizations and private individuals around the globe. The BLOOMBERG PROFESSIONAL ® service and Bloomberg’s media services provide real-time and historical pricing, indicative data, reporting, research, estimates, analytics, portfolio management tools, electronic trading and order management systems, multimedia events and electronic communications to Bloomberg clients in more than 150 countries, 24 hours a day. bloomberg.com Frankfurt London San Francisco Singapore Tokyo +49 69 9204 1210 +44 20 7330 7500 +1 415 912 2960 +65 6212 1000 +81 3 3201 8900 Hong Kong New York São Paulo Sydney +852 2977 6000 +1 212 318 2000 +55 11 3048 4500 +61 2 9777 8600The BLOOMBERG PROFESSIONAL service, BLOOMBERG Data and BLOOMBERG Order Management Systems (the "Services") are owned and distributed locally by Bloomberg Finance L.P. ("BFLP") and itssubsidiaries in all jurisdictions other than Argentina, Bermuda, China, India, Japan and Korea (the "BLP Countries"). BFLP is a wholly-owned subsidiary of Bloomberg L.P. ("BLP"). BLP provides BFLP with allglobal marketing and operational support and service for the Services and distributes the Services either directly or through a non-BFLP subsidiary in the BLP Countries. The Services include electronic tradingand order-routing services, which are available only to sophisticated institutional investors and only where the necessary legal clearances have been obtained. BFLP, BLP and their affiliates do not provideinvestment advice or guarantee the accuracy of prices or information in the Services. Nothing on the Services shall constitute an offering of financial instruments by BFLP, BLP or their affiliates.BLOOMBERG, BLOOMBERG PROFESSIONAL, BLOOMBERG MARKETS, BLOOMBERG NEWS, BLOOMBERG ANYWHERE, BLOOMBERG TRADEBOOK, BLOOMBERG BONDTRADER, BLOOMBERGTELEVISION, BLOOMBERG RADIO, BLOOMBERG PRESS and BLOOMBERG.COM are trademarks and service marks of BFLP, a Delaware limited partnership, or its subsidiaries.