Federal Reserve "Normalizing" Balance Sheet in October, Not Raising Rates

Economic news from the Fed - interest rate rise is on hold, Fed to begin "normalizing" their largest ever ($4.5 trillion) balance sheet in October. This means they will be selling their US securities and toxic assets they bought up in the 2008 crisis (for which they never had a plan for what to do with it). They will likely sell it off veryyyy slowwllyyy so the markets won't react much, but $4.5 trillion is a lot.. I think the Fed is running out of ammunition.

Link: www.theguardian.com...

FOMC Press Conference from today (began at 2:30 PM, still live)



By the way, US trade deficit hit its highest level in 8 years this quarter... link

US National Debt is also at an all-time high usdebtclock.org....

Do YOU think Janet Yellen's jawboning dovishness is warranted? I sure as hell don't. But bankers will be bankers


PS - anyone who is well-versed in the markets, I'd love to hear what you think about the ICE Dollar future index (DXY) - see how it jumped up this afternoon right around the time the FOMX press conference? Is that confidence in the dollar a result of Yellen's (Yellen the Felon) remarks, or something else? Would love to hear your thoughts (check the chart below)

DXY chart (if you are viewing this OP later on you may need to adjust the view to see what the DXY was doing earlier on to see the spike): link

Interesting times ahead - I bet in the fall we see a hefty correction in the overvalued stock market. That's my 2 pretty pennies!

My estimate for the housing market in my corner of the states to correct was for mid august- seems housing prices continue to rise, even though nobody in my generation or younger can afford them.

Seems I was off.
I was also expecting the fed to hike the rate and crash the economy with a correction so they could blame potus... seems I'm wrong two for two.

I was betting on the market correction to buy property.

a reply to: lordcomac

Didn't you just sell your house and move out of the city? Or was that another member?

I have a friend who just bought his first house and I didn't have the heart to tell him (in my humble opinion) that he should have waited to a correction in the real estate market (where I live the real estate market seems quite frothy as well)

a reply to: FamCore

Yeah- that was me.
Renting at the moment- it's awful.

Waiting for the housing correction to flood the market with cheap land or foreclosed homes on land so I can buy and build my own place.

I think the Fed has really backed themselves into a corner. I can't see how they can do anything without some negative consequences. They should have cut back years ago and raised rates quicker.

Just so people know, the Fed raises the Fed Funds rate. This is the rate that large banks lend money to each other on an overnight basis. Consumer interest rates are usually tied to the Fed Funds rate indirectly, so rates on things like credit cards and home equity lines tend to go up in lock step. So if Fed raises Fed Funds rate by .25%, then credit card rates usually go up by same amount.

The Fed meets 8 times a year to discuss rates.

Also, the Fed DOES NOT control mortgage rates. Mortgage rates sometimes go down when the Fed raises the Fed Funds rate because investors think it could hurt equities, so they start buying bonds which has a positive effect on mortgage (lowers the rate).

There are some housing markets that are certainly frothy (think Bay Area and NYC) but I think the vast majority of housing markets are fairly safe value wise. Mortgage underwriting is far more stringent than it was circa 2006 or so. The borrower's won't be going belly up over a broken furnace and much of the speculation / fraud that fueled the last bubble has been held in check through tougher underwriting.

a reply to: lordcomac

Waiting for the housing correction to flood the market with cheap land or foreclosed homes on land so I can buy and build my own place.

I would def just try to stick it out - I think you're playing your cards right based on what you've told me.

Renting can be pretty sh*tty, I had landlords who were doing all sorts of illegal things, including harassing me, making false statements and jacking up my rent without due notice or fair cause. Living with my brother now and can't complain, but definitely want me own place when the opportunity presents itself. Best of luck in your hunt for a new home

a reply to: Edumakated

Completely Incorrect.

The Fed controls it all from start to finish.

originally posted by: FamCore
Economic news from the Fed - interest rate rise is on hold, Fed to begin "normalizing" their largest ever ($4.5 trillion) balance sheet in October. This means they will be selling their US securities and toxic assets they bought up in the 2008 crisis (for which they never had a plan for what to do with it). They will likely sell it off veryyyy slowwllyyy so the markets won't react much, but $4.5 trillion is a lot.. I think the Fed is running out of ammunition.

Link: www.theguardian.com...

FOMC Press Conference from today (began at 2:30 PM, still live)

By the way, US trade deficit hit its highest level in 8 years this quarter... link

US National Debt is also at an all-time high usdebtclock.org....

Do YOU think Janet Yellen's jawboning dovishness is warranted? I sure as hell don't. But bankers will be bankers

PS - anyone who is well-versed in the markets, I'd love to hear what you think about the ICE Dollar future index (DXY) - see how it jumped up this afternoon right around the time the FOMX press conference? Is that confidence in the dollar a result of Yellen's (Yellen the Felon) remarks, or something else? Would love to hear your thoughts (check the chart below)

DXY chart (if you are viewing this OP later on you may need to adjust the view to see what the DXY was doing earlier on to see the spike): link

Interesting times ahead - I bet in the fall we see a hefty correction in the overvalued stock market. That's my 2 pretty pennies!

edit on 20-9-2017

We are screwed, that's all you need to know about the markets. extra DIV