First off, Happy New Year! We hope your bank realizes unparalleled success this year!
The start of the new year brings more of the same – discussion and debate over interest rates and what the best next moves for the Fed are.
Needless to say, there’s more uncertainty than there’s been in a very long time.
Community Bank Advisors helps community banks succeed by providing exceptional risk management solutions. What better time to assess your risks, in a time when so much is uncertain.
If your ALCO needs any help during these challenging times, please don’t hesitate to reach out to us at (918) 791-0699 or by emailing us at firstname.lastname@example.org.
Markets stage late rally but 2018 decline still worst in a decade (source)
- US markets trimmed 2018 losses in a Monday rally, but it was not enough to prevent the worst yearly decline for stocks since 2008.
- All 3 major indexes finished 2018 in the red during the finale of a tumultuous year.
- The Dow Jones industrial average closed the last day of 2018 at 23,32.467 points, or 1.1%. The Dow finished at a negative 5.97% for the year.
- The Standard & Poor’s 500-stock index ended Monday at 2,506.85, up 21.11 points or 0.85%. It closed 2018 down 6.25% on the year.
- Nasdaq composite index ended the year at 6,635.28, despite a 50.76-point gain, about 0.77%. The Nasdaq finished down 4.28% for the year.
- Energy companies have been hobbled by a 25% decline in oil prices in 2018 due to a supply glut.
Fed faces critical time with interest rates and should move to sidelines, Kaplan says (source)
- The Federal Reserve “should take no further action on interest rates for now, in order to gauge the health of the economy and get a better sense of any message being sent by weaker financial markets,” said Dallas Fed President Robert Kaplan on Thursday, Jan. 3rd.
- The Fed has penciled in two rate hikes in 2019. With the recent sell-off in stocks SPX, +2.74% investors now think the next Fed move will be to cut interest rates.
- The Dallas Fed president said the weakness in financial markets is likely reflecting 3 big issues: a deceleration in global growth, weakness in interest-sensitive sectors and tightness in financial markets in the form of widening credit spreads.
- The Fed is now allowing as much as $50 billion in maturing securities to roll off its balance sheet every month. Some traders are concerned this program, known as quantitative tightening, is drying up liquidity.
Powell: Fed “will be patient” as it mulls more rate hikes, boosting stocks (source)
- Federal Reserve Chairman Jerome Powell said Friday the central bank “will be patient” as it weighs future interest rate hikes in light of low inflation, adding that policymakers will also take into account recent stock market volatility.
- “With muted inflation readings that we’ve seen coming in, we will be patient as we watch to see how the economy evolves,” Powell said in discussing with former Fed chairs Janet Yellen and Ben Bernanke.