Dollars and Jens
Wednesday, June 26, 2013
Spending on services and investment were revised down a lot from last month's guesses.
II 09III 09IV 09I 10II 10III 10IV 10I 11II 11III 11IV 11I 12II 12III 12IV 12I 13
Gross domestic product-.
Nondurable goods-.
Durable goods-.141.43-.
Change in private inventories-
Fixed investment-2.49-.32-.69-.101.58-.10.87-.141.391.751.
Net exports of goods and services2.47-.70-.05-.83-1.81-.951.
Government spending1.94.79.23-.69.59-.06-.94-1.49-.16-.60-.43-.60-.14.75-1.41-.93
The table is also at my dropbox folder, which is likely to be updated (slightly) more quickly than blog posts.


Wednesday, June 19, 2013
The FOMC statement, as revised:
Information received since the Federal Open Market Committee met in March May suggests that economic activity has been expanding at a moderate pace. Labor market conditions have shown some further improvement in recent months, on balance, but the unemployment rate remains elevated. Household spending and business fixed investment advanced, and the housing sector has strengthened further, but fiscal policy is restraining economic growth. Inflation Partly reflecting transitory influences, inflation has been running somewhat below the Committee's longer-run objective, apart from temporary variations that largely reflect fluctuations in energy prices. Longer-term but longer-term inflation expectations have remained stable.
Consistent with its statutory mandate, the Committee seeks to foster maximum employment and price stability. The Committee expects that, with appropriate policy accommodation, economic growth will proceed at a moderate pace and the unemployment rate will gradually decline toward levels the Committee judges consistent with its dual mandate. The Committee continues to see sees the downside risks to the economic outlook outlook for the economy and the labor market as having diminished since the fall. The Committee also anticipates that inflation over the medium term likely will run at or below its 2 percent objective.
To support a stronger economic recovery and to help ensure that inflation, over time, is at the rate most consistent with its dual mandate, the Committee decided to continue purchasing additional agency mortgage-backed securities at a pace of $40 billion per month and longer-term Treasury securities at a pace of $45 billion per month. The Committee is maintaining its existing policy of reinvesting principal payments from its holdings of agency debt and agency mortgage-backed securities in agency mortgage-backed securities and of rolling over maturing Treasury securities at auction. Taken together, these actions should maintain downward pressure on longer-term interest rates, support mortgage markets, and help to make broader financial conditions more accommodative.
The Committee will closely monitor incoming information on economic and financial developments in coming months. The Committee will continue its purchases of Treasury and agency mortgage-backed securities, and employ its other policy tools as appropriate, until the outlook for the labor market has improved substantially in a context of price stability. The Committee is prepared to increase or reduce the pace of its purchases to maintain appropriate policy accommodation as the outlook for the labor market or inflation changes. In determining the size, pace, and composition of its asset purchases, the Committee will continue to take appropriate account of the likely efficacy and costs of such purchases as well as the extent of progress toward its economic objectives.
To support continued progress toward maximum employment and price stability, the Committee expects that a highly accommodative stance of monetary policy will remain appropriate for a considerable time after the asset purchase program ends and the economic recovery strengthens. In particular, the Committee decided to keep the target range for the federal funds rate at 0 to 1/4 percent and currently anticipates that this exceptionally low range for the federal funds rate will be appropriate at least as long as the unemployment rate remains above 6-1/2 percent, inflation between one and two years ahead is projected to be no more than a half percentage point above the Committee's 2 percent longer-run goal, and longer-term inflation expectations continue to be well anchored. In determining how long to maintain a highly accommodative stance of monetary policy, the Committee will also consider other information, including additional measures of labor market conditions, indicators of inflation pressures and inflation expectations, and readings on financial developments. When the Committee decides to begin to remove policy accommodation, it will take a balanced approach consistent with its longer-run goals of maximum employment and inflation of 2 percent.
Voting for the FOMC monetary policy action were: Ben S. Bernanke, Chairman; William C. Dudley, Vice Chairman; James Bullard; Elizabeth A. Duke; Charles L. Evans; Jerome H. Powell; Sarah Bloom Raskin; Eric S. Rosengren; Jeremy C. Stein; Daniel K. Tarullo; and Janet L. Yellen. Voting against the action was James Bullard, who believed that the Committee should signal more strongly its willingness to defend its inflation goal in light of recent low inflation readings, and Esther L. George, who was concerned that the continued high level of monetary accommodation increased the risks of future economic and financial imbalances and, over time, could cause an increase in long-term inflation expectations.

The most recent version of this.


Thursday, June 13, 2013
the bond market drop and today's reopening
When the treasury auctions off a new bond, they take bids in terms of interest rates, and at the conclusion of the auction they set the coupon such that the bond is priced near, but not quite (typically) at, par (i.e. $100 in the convention of the announcement below). A month or two after an auction the treasury will frequently "reopen" an auction; rather than auction off an entirely new issue of bonds, they auction off more of the previous issue. Thus a thirty-year bond auction in May of 2013 issues bonds that mature in May 2043; in June of 2013, a reopening of the issue results in 29 year, 11 month bonds, perfectly fungible with the previously sold issue. Since the coupon at that point has already been set, the price of the bonds may exceed par, or may be further below par than occurs for an initial auction.

Because interest rates have risen substantially over the last month or two, and because a 30 year bond changes in price quite a bit when the interest rate changes, a reissue for an auction that took place today sold at less than 91% of par. I don't know whether there are records kept on that — it may be that a re-issue sold at a lower price as recently as 1994. If 91% isn't a record low, though, it's certainly notable.

Description:                  29-Year 11-Month Bond
Term:                         29-Year 11-Month 
Series:                       Bonds of May 2043
Interest Rate:                2-7/8%
High Yield:                   3.355%
Price:                        $90.978135
Allotted at High:             47.11%
Accrued Interest*:            $2.57813
Total Tendered:               $32,091,472,600
Total Accepted:               $13,000,004,600
Issue Date:                   06/17/2013
Dated Date:                   05/15/2013
Original Issue Date:          05/15/2013
Maturity Date:                05/15/2043
CUSIP:                        912810RB6

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