Fed not playing games Fed not playing games http://www.federatedinvestors.com/mmdt/static/images/mmdt/mmdt-logo-amp.png http://www.federatedinvestors.com/mmdt/daf\images\insights\article\mmdt-weekly-Small.jpg February 1 2021 February 1 2021

Fed not playing games

Weekly Bond Commentary

Published February 1 2021

What if the first question at a Fed policy meeting was about video games?

We found out when Federal Reserve Chair Powell shrugged off a question by a reporter on the GameStop share price phenomenon. He didn’t seem too happy to be even asked about it.

The Federal Open Market Committee convened last week for the first time in 2021 and to no one’s surprise, made no changes to its policy. Policymakers noted that the pace of economic recovery has moderated somewhat and that the recovery remains dependent on vaccination progress. It is clear they are sticking to their August pledge to withhold raising the fed funds rate until inflation is at least moderately above 2% for some time and the economy is able to achieve maximum employment.

Consumer confidence improved in January, as measured by the Conference Board. Consumers were more confident about the future than about the present, indicating that they too view vaccination progress as important. Not since May have as many respondents indicate that jobs were hard to find, consistent with still-high weekly jobless claims. Separately, the University of Michigan consumer sentiment survey showed that confidence edged a little lower in the last half of January. Consumers’ assessment of current conditions edged lower but expectations for the future improved. The latter matters more, and likely reinforces hope and optimism that vaccinations and new stimulus will soon return the nation to some sense of normalcy.

Tags Markets/Economy . Fixed Income .
DISCLOSURES

Views are as of the date above and are subject to change based on market conditions and other factors. These views should not be construed as a recommendation for any specific security or sector.

The Conference Board's Consumer Confidence Index measures how optimistic or pessimistic consumers are about the economy.

The University of Michigan Consumer Sentiment Index is a measure of consumer confidence based on a monthly telephone survey by the University of Michigan that gathers information on consumer expectations regarding the overall economy.

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