Tuesday, June 05, 2012

Look Ahead

by Calculated Risk on 6/05/2012 09:25:00 PM

The most interesting information tomorrow are the ECB meeting in Europe (no rate change expected), and the speech by Fed Vice Chair Janet Yellen. Here is a story on the Fed from Jon Hilsenrath at the WSJ: Fed Considers More Action Amid New Recovery Doubts

Disappointing U.S. economic data, new strains in financial markets and deepening worries about Europe's fiscal crisis have prompted a shift at the Federal Reserve, putting back on the table the possibility of action to spur the recovery.
...
The Fed's next meeting, June 19 and 20, could be too soon for conclusive decisions. Fed policy makers have many unanswered questions and have had trouble forming consensus in the past. Top Fed officials have said that they would support new measures if they became convinced the U.S. wasn't making progress on bringing down unemployment. Recent disappointing employment reports have raised this possibility, but the data might be a temporary blip.
...
Their options include doing nothing and continuing to assess the economic outlook—or more strongly signaling a willingness to act later if the outlook more clearly worsens. Fed policy makers could take a small precautionary measure, like extending for a short period its "Operation Twist" program, in which the Fed is selling short-term securities and using the proceeds to buy long-term securities. Or, policy makers could take bolder action such as launching another large round of bond purchases if they become convinced of a significant slowdown.
And the economic releases on Wednesday:

• At 7:00 AM ET, the Mortgage Bankers Association (MBA) will release the mortgage purchase applications index. Expect record low mortgage rates and probably an increase in refinance activity.

• At 8:30 AM, the final Productivity and Costs for Q1 will be released.

• At 2:00 PM the Federal Reserve Beige Book will be released. This is an informal review by the Federal Reserve Banks of current economic conditions in their Districts. This will receive extra attention this month as investors look for signs of a slowdown.

• And at 7:00 PM, Fed Vice Chair Janet Yellen will speak on "The Economic Outlook and Monetary Policy" at the Boston Economic Club Dinner, Boston, Massachusetts.