Interbank Market News Scan: No political rhetoric today that impacts the overnight markets in the U.S.

The quotes …

Interest on Reserve Balances: 4.90%

Effective Fed Funds Rate: 4.83%

One-month Treasury: 4.27%

Two-month Treasury: 4.89%

Two-year Treasury: 4.03%

Ten-year Treasury: 3.43%

30-day Federal Funds Options: 95.1725

30-day federal Funds Futures: 95.145

Sources: U.S. Department of the Treasury, Board of Governors of the Federal Reserve System, CME Group.

The takeaway …

All appeared quiet today in terms of political narrative and short-term rates. The Biden-Harris Administration was quiet on the banking system. While I never expect much direct narrative from the Administration regarding the causes of inflation i.e., increase in the money supply, checking in on any rhetoric, particularly from the National Economic Council or the Council on Economic Advisors is a must. They are the ones with the President’s ear and we should be mindful of what they share with him. We should also be mindful that most of what they share with the public is designed to win votes.

I will add that all was quiet on the congressional front as well with no new legislation directed at monetary policy. The Federal Reserve System is a creature of the Congress and while the Congress has long abdicated its duties to regulate the value of money, we should take note of what they are discussing in terms of regulating how it is exchanged and perceived threats to the currency and the payment system.

I would think that given the U.S. economy runs on a fractional reserve platform that the Administration and the Congress would politely opine more on monetary policy. The Administration and the Congress appear to prefer the “kick the can across Pennsylvania Avenue and down Constitution Avenue” approach to monetary policy, mentioning it only when it is time to deflect criticisms on his handling of the economy.

Alton Drew

11 April 2023