FOMC

The U.S. economy is "too resilient and this will force the Fed to not only deliver more tightening but also to keep rates higher for much longer," OANDA's Edward Moya said. NYC and Connecticut GOs on tap.

The Investment Company Institute reported investors pulled another $137 million out of municipal bond mutual funds in the week ending May 17, after $290 million of outflows the previous week.

"If the banking stresses start to bring inflation down for us, then maybe we're getting closer to being done. I just don't know right now," said Federal Reserve Bank of Minneapolis President Neel Kashkari.

Federal Reserve Chair Jerome Powell gave a clear signal he is inclined to pausing interest-rate increases next month and said that tighter credit conditions could mean the policy peak will be lower.

Federal Reserve Bank of Dallas President Lorie Logan said the case for pausing interest rate increases at the central bank's June meeting isn't yet clear, while her colleague Gov, Philip Jefferson sounded ready to be patient.

The FOMC meets June 13-14. Join us June 15 at 2 p.m., Eastern time, as Jeffrey Cleveland, chief economist at Payden & Rygel, provides his take on the meeting statement, Federal Reserve Board Chair Jerome Powell's press conference and the latest Fed projections.

Two Federal Reserve officials signaled they favored pausing interest rate increases, while a third policymaker said the central bank's task in subduing inflation was not complete.

The Federal Reserve meeting May 2-3 will be closely watched for hints about what the FOMC's next move is. Join BNP Pariba U.S. Economist Yelena Shulyatyeva at 11 a.m. May 4 as she takes a look at the meeting and Chair Powell's press conference.

The Federal Reserve said that banks reported tighter standards and weaker demand for loans in the first quarter, extending a trend that began before recent stresses in the banking sector emerged.

Federal Reserve Bank of St. Louis President James Bullard said he thinks the U.S. central bank can still achieve a soft landing, with inflation returning to the Fed's 2% target without triggering a significant downturn.

Outflows from municipal bond mutual funds intensified as Refinitiv Lipper reported $846.116 million was pulled from them as of Wednesday after $92.055 million of outflows the week prior. 

The secondary was quiet and the sole deal of size came from a $400 million-plus competitive water and sewer loan from Portland, Oregon. The recent rise in yields makes for more compelling levels.

Still no clarity as the banking crisis adds to the difficulty of predicting an economy still feeling COVID impacts and uncertainty about the prospects for a recession.

Federal Reserve Bank of St. Louis President James Bullard said he favored continued interest-rate hikes to counter persistent inflation, while recession fears are overblown.

Richmond Federal Reserve Bank President Thomas Barkin said he wants to see more evidence that U.S. inflation is easing back to the central bank's goal of 2%.

Federal Reserve Governor Christopher Waller said he favored more monetary policy tightening to reduce persistently high inflation, although he said he was prepared to adjust his stance if needed if credit tightens more than expected.

Federal Reserve policymakers scaled back their expectations for rate hikes this year after a series of bank collapses roiled markets last month, and stressed they would remain vigilant for the potential of a credit crunch to further slow the economy, a record of the meeting showed.

Outflows continued as Refinitiv Lipper reported $427.082 million was pulled from municipal bond mutual funds in the week that ended Wednesday after $461.123 million of outflows the week prior.

"In short, it appears that the end of the current tightening cycle is coming into view," said Wells Fargo Securities Chief Economist Jay Bryson.

Members of the Fed learned the wrong lesson from bizarrely focusing on the 1970s when they said "If history has taught us anything, it's to not let up too soon on inflation."