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2024/10/18
Recent volatility in global stock markets has intensified due to the Bank of Japan's interest rate hike, primarily driven by the yen's appreciation and the unwinding of large-scale carry trades. In a carry trade, investors borrow low-interest yen and invest in higher-yield assets like U.S. Treasuries or U.S. equities to earn a yield differential. However, the Bank of Japan's rate hike has pushed up the yen’s exchange rate, increasing both currency and liquidity risks. This has prompted investors to swiftly unwind their positions to repay yen loans, creating selling pressure in the market. This shift has reduced the attractiveness of carry trades and impacted market liquidity.
# Trading
# Financial Lessons
# Investment
# Japan
# Bank of Japan
# Monetary Policy
# Investment Strategy
2023/9/5
The full name of the FED is the Federal Reserve System, which serves as the central banking system of the United States. It was established in 1913 under the Federal Reserve Act, following the financial panic of 1907 to prevent similar crises from occurring. The Fed’s mission centers on three main goals: promoting maximum employment, stabilizing prices, and managing long-term interest rates. The first two goals are known as the "Dual Mandate." For convenience, people often refer to it simply as "the Fed." In this post, we’ll dive deeper into the Fed’s structure, including its Board of Governors and the Federal Open Market Committee (FOMC), to help you gain a full understanding of how the Fed operates!
# Macroeconomics
# USA
# Central Bank
# Federal Reserve
# Inflation
# Employment
The Federal Open Market Committee (FOMC) serves as the central decision-making body of the Federal Reserve System. Members' stances (such as hawkish or dovish) can vary, significantly influencing the direction of interest rates. The FOMC is composed of 12 voting members. During meetings, all regional Fed presidents participate in discussions on the overall economic situation. However, only the 12 voting members cast votes to determine the final outcome of monetary policy decisions.
# fiisual lab
In addition to influencing interest rates through monetary policy, the Federal Reserve’s reports also frequently have a significant impact on the market. Common reports include the Federal Open Market Committee Statement, FOMC Meeting Minutes, Summary of Economic Projections (SEP), Beige Book, and the Senior Loan Officer Opinion Survey (SLOOS). There are also more frequently updated reports such as the Balance Sheet (H.4.1) and the Assets and Liabilities of Commercial Banks (H8). These reports provide diverse insights, allowing for market interpretation from various perspectives and revealing the real thoughts of scholars, experts, and Fed officials on the economy.
# Editor's Pick
The Federal Reserve sets "monetary policy" through FOMC meetings to achieve its dual mandate of stability. The well-known actions of raising and lowering interest rates are part of this process, aimed at controlling the Federal Funds Rate (FFR) using various FOMC tools. Traditionally, these tools include Open Market Operations, the Discount Window, and Required Reserve Ratios. However, additional tools have evolved over time such as Quantitative Easing (QE), Interest on Reserve Balances (IORB), and the Overnight Reverse Repurchase Agreement (ON RRP). This article will introduce each of these tools in detail, explaining their specific functions and impacts.
# Macroeconomic Data
