The US monetary policy outlook was front and center in financial markets this week. On Wednesday, the Federal Reserve affirmed that the bond buying program will end in October. The statement also indicated that rates will stay low for “a considerable period of time after the asset purchase program ends.” When surveyed in June, policy makers said they did not expect to move to raise rates until the middle of next year. Today’s non-farm payrolls report confirmed their patient outlook, but that’s provided little comfort to equity markets which are down for the second day in a row at the time of writing.
The FSOC met yesterday regarding the designation of some asset managers as systemically important (SIFIs). GE’s financial unit and AIG are expected to be reaffirmed as SIFIs, while asset managers Blackrock and Fidelity are expected to escape this designation. The council directed staff to do a more focused analysis of industry wide products and activities to assess potential risks within the asset management industry. The committee could hand the SEC additional oversight responsibilities and require them to address specific risky activities. The council pressured to SEC to address the risks posed by the money-market industry back in 2012, which were announced last week. Next week should be fairly quiet on the policy front with Congress adjourning for the summer and no major economic data releases on tap.
Federal Reserve Statement
Fed Keeps Same Narrative Taper Proceeds But Markets Move
CFP Senior Fellow, Cliff Rossi on the FOMC Meeting
Fed Boosts View of Economy
Hilsenrath: Fed Can Remain Patient on Rate Hike Debate After Data
Asset Managers May Avoid Oversight
OFR’s Initial Report on Asset Management Industry to FSOC (2013)
China’s Banks Post World’s Largest Systemic Risk
New Accounting Rules on Bad Debts for Banks Outside U.S.