FOMC takedown

At this afternoon’s FOMC Press Conference in response to a question posed as to whether the Fed would ever impose depositor haircuts as was attempted this week in Cyprus, Fed Chairman Ben Bernanke confirmed that Cyprus style depositor haircut wealth confiscation is possible here in the US if the Cyprus event or another event in Europe were to become contagious and the people lose confidence in the US dollar.

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ancona said:

Could someone please decipher the bar chart SA posted. I am "chartarded" and can't seem to process the information this morning.

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Oops. The Federal Reserve accidentally emailed the minutes from its March meeting to about 100 people a day early.

While no major news was expected to come from the minutes, they are nevertheless a key document that can move markets from time to time. Wall Street players often dig deep into the minutes for hints about when the central bank may pull back on its bond-buying policy or raise interest rates.

For that reason, the minutes are usually highly protected by the central bank and their release is supposed to be executed carefully.

A Fed spokesman told CNNMoney the mistake was "entirely accidental," and it was a "human error," not a technological one. The roughly 100 individuals on the list mostly included Congressional employees and employees of trade organizations. They received the minutes shortly after 2 p.m. on Tuesday.

After discovering the error this morning, the Federal Reserve decided to release the minutes to the broader public at 9 a.m. Wednesday.

At this point, it's not clear whether any trading took placed based on the early release, but the Federal Reserve Board's Inspector General will conduct an initial investigation of the error.

"We will be working with market regulators, the SEC and CFTC to insure they have the information they need to evaluate the incident," a Fed spokesman said.
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Fed Releases Names Of Early FOMC Minutes Recipients: Include Employees Of Goldman, Barclays, JPM, Law And PE Firms

We will release the full list of named recipients once we get it, but here is what we now for now, via BBG and CNN:

EMPLOYEES AT GOLDMAN SACHS, BARCLAYS, JP MORGAN, CITI, NOMURA, UBS, HSBC RECEIVED FED MINUTES EARLY YESTERDAY
MOST OF THE BANK EMPLOYEES APPEAR TO WORK IN GOVERNMENTAL RELATIONS (Lobbies)
ABA, SIFMA, SENATE STAFFERS RECEIVED FED MINUTES EARLY
FED NAMES 154 RECIPIENTS OF EARLY RELEASE OF FOMC MINUTES
FED MINUTES SENT EARLY TO BANKS, LAW FIRMS, PRIVATE EQUITY
FED EARLIER SAID RELEASE WENT MAINLY TO CONGRESS, TRADE GROUPS
NONE OF THE PEOPLE ON THE LIST ALERTED THE FED THAT THEY RECEIVED NONPUBLIC INFO A DAY EARLY

In other words: absolutely everyone who trades risk assets for a living!

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... the June 2003 FOMC minutes. It’s long and I highly doubt that anyone will read this but it’s in black and white what the Fed was going to do back in 2003. The programs of Zirp, QE, operation twist, and smashing the Fed’s fund rate was talked about and basically agreed by most in the meeting. What we are seeing currently was already predetermined by the Fed 10 years ago. This was all premeditated but some Fed officials were very nervous about the outcomes of these programs. They understood that if they started to smash the yield curve to zero and buy the bonds directly it would be irreversible. They also had reservations about unwinding these positions. They talked about their balance sheet exploding and it would cause a perception problem. We are witnessing all of this right now! It’s absolutely crazy that people haven’t read this document. It would really open your eyes and prove how rigged every market is. ...

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Chairman Ben S. Bernanke will probably reduce the Federal Reserve’s monthly bond buying in the fourth quarter to $50 billion from $85 billion as he begins to unwind record stimulus, economists said in a Bloomberg survey.

Policy makers must find a way to slow the pace of purchases enough to signal confidence the economy is strengthening without prompting a sudden rise in interest rates, said former Fed economists Michael Feroli and Joseph LaVorgna. They said that probably means the Fed, which concludes a policy meeting today, will follow a three-step strategy to wind down bond buying.

“There is concern the first taper would be misinterpreted as the onset of a tightening cycle” and cause interest rates to go up, said Feroli, chief U.S. economist at JPMorgan Chase & Co. (JPM) in New York. An initial reduction to $50 billion to $60 billion a month, followed by a second cut to $30 billion and then a halt to bond buying “would be enough of a runway to know and gauge the effects of what they’re doing, but not too long a runway where it’s a painfully interminable process.”

The Federal Open Market Committee (TREFQE2) plans to release a statement at 2 p.m. after a meeting in Washington. None of the 47 economists in the Bloomberg survey taken April 25-29 expects a decision at this week’s meeting to change the pace of purchases.
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The Federal Reserve (TREFTOTL) said it will maintain its bond buying at a pace of $85 billion a month and is prepared to raise or lower the level of purchases as economic conditions evolve.
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swissaustrian said:

During the last weeks, the FED always became nervous when bonds yields spiked and stocks fell. They reacted immediately via mouthpieces and assured that everything would be fine. They will be very cautious in talking about any cut back in QE.

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