Economic News

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altmin said:
www.investmentnews.com

BofA sees 'cracks' in foreign demand for Treasuries

Strategists say the "unusual" decline, coming at a time when the dollar is weak, is part of a broader concerning trend of investors lightening their US asset exposure.
www.investmentnews.com www.investmentnews.com

Central banks have been selling Treasuries since March, suggesting that they are diversifying away from dollar assets, according to Bank of America Corp.
Treasuries held by global central banks and other official entities in custody at the New York Federal Reserve fell $17 billion in the week through June 11 on average, extending their declines since late March to $48 billion. In addition, foreign holdings in the Fed’s reverse repurchase agreement facility have dropped roughly $15 billion since late March.

The decline is “unusual” because central banks typically buy Treasuries when the dollar is weak, as it has been this year, strategists led by Meghan Swiber wrote in a note Monday, with the title “Foreign UST demand shows cracks.”

International appetite for Treasuries has been under increasing scrutiny in recent months. President Donald Trump’s trade and fiscal policies have roiled financial markets and fueled speculation that overseas buyers will shun US assets — the so-called Sell America trade. The Bloomberg Spot Dollar Index is down about 8% in 2025, and is near a three-year low in part on concern that the levies will sour the US economy’s prospects.
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Trump supporters - who and what do you think is causing this?
 
nycfan said:
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I’d welcome a 100 bps drop to juice the leveraged acquisition market but I assume we will have to settle for a couple of 25 bps cuts this Fall. But maybe a surprise cut in July (or even next week)? Probably not but would be nice.
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I'm going out on a limb here because you know about a million times more about this than I do, but I'm also starting to hope for a big cut in July. Yes, I know it will trigger more inflation. But we need to do something to start getting the housing market unstuck, and a substantial cut would help a lot. I also think we could use a jolt of energy with all the chaos happening around us right now.
 
ChileG said:
During what would be a great economy if the Trump administration would stop actively fucking it up.
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GWB was known for playing video games on his computer in the White House. At the time I prayed he would leave alone the good economy that Clinton left him and stick to playing video games.

Likewise, in 2017 I prayed that Trump would leave alone the good economy that Obama left him on a silver platter and stick to cheating on the golf course

And now I have been praying Trump would leave alone the good economy that Sleepy Joe Biden left him and stick to conning the MAGAs out of their beer and cigarette money.

Hey God, if you actually exist, you are 0-3
 

Federal Reserve Board announces that reputational risk will no longer be a component of examination programs in its supervision of banks​


www.federalreserve.gov

Federal Reserve Board announces that reputational risk will no longer be a component of examination programs in its supervision of banks

The Federal Reserve Board on Monday announced that reputational risk will no longer be a component of examination programs in its supervision of banks. The Bo
www.federalreserve.gov

IMG_7595.jpeg


The Fed - SR 95-51 (SUP): Rating the Adequacy of Risk Management Processes and Internal Controls at State Member Banks and Bank Holding Companies

The Federal Reserve Board of Governors in Washington DC.
www.federalreserve.gov
 
nycfan said:

Federal Reserve Board announces that reputational risk will no longer be a component of examination programs in its supervision of banks​


www.federalreserve.gov

Federal Reserve Board announces that reputational risk will no longer be a component of examination programs in its supervision of banks

The Federal Reserve Board on Monday announced that reputational risk will no longer be a component of examination programs in its supervision of banks. The Bo
www.federalreserve.gov

IMG_7595.jpeg


The Fed - SR 95-51 (SUP): Rating the Adequacy of Risk Management Processes and Internal Controls at State Member Banks and Bank Holding Companies

The Federal Reserve Board of Governors in Washington DC.
www.federalreserve.gov
Click to expand...
Not a bad thing, IMO. Judge banks based on what they're doing now, not what has happened in the past.

Of course, that requires a rigorous and credible examination regime, which Elon and Trump intentionally gutted.
 
lawtig02 said:
Not a bad thing, IMO. Judge banks based on what they're doing now, not what has happened in the past.
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Bank runs are basically all about confidence and reputation. A bank with a bad reputation will soon be an ex-bank.

I'm no banking regulator, and the whole topic of risk management for banks is super-complex and beyond my expertise by quite a lot. Still, as someone with adjacent expertise, my initial reaction to this is quite negative. I'd need to see the arguments both ways to form any judgment. Here I'm conveying my instinct.
 
nycfan said:

Federal Reserve Board announces that reputational risk will no longer be a component of examination programs in its supervision of banks​


www.federalreserve.gov

Federal Reserve Board announces that reputational risk will no longer be a component of examination programs in its supervision of banks

The Federal Reserve Board on Monday announced that reputational risk will no longer be a component of examination programs in its supervision of banks. The Bo
www.federalreserve.gov

IMG_7595.jpeg


The Fed - SR 95-51 (SUP): Rating the Adequacy of Risk Management Processes and Internal Controls at State Member Banks and Bank Holding Companies

The Federal Reserve Board of Governors in Washington DC.
www.federalreserve.gov
Click to expand...
This move is consistent with Treasury/OCC policy announced in March to discontinue assessing reputational risk as one of the 8 prongs of a bank audit. The Trump Administration was adamant that the reputational risk assessment put too much pressure on crypto and other developing industries and contributed to debanking of such industries to avoid pressure on the reputational risk component of the audit.

For their part, lenders have complained that the reputational risk component is too subjective and can ding an institution for matters out of their control that do not impact the financial risks to the lender or depository.
 
The lack of regulatory concern about reputational risk has given fintechs a leg up on traditional banks and has made it hard for some industries (crypto, gun dealers, payday lenders, marijuana growers, gambling establishments, racist organizations, etc.) to obtain customary banking services, but my view is that the reputational risk component could be modified instead of eliminated as a key to the survival of a bank or other financial institution.

I suspect the biggest impact will be for the benefit of crypto companies in the immediate term as I think banks are not otherwise eager to platform some of the other socially questionable organizations they avoid under the reputational risk regulation. This change could also complicate efforts to of banks that want to terminate a customer that creates reputational risk by association for the bank (which I am sure is part of the intent from the “debanking” conspiracists who complain that law-abiding members of right wing militias and other right wing or libertarian groups can’t get or keep banking services because of the tyranny of reputational risk concerns).
 
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nycfan said:
The Trump Administration was adamant that the reputational risk assessment put too much pressure on crypto and other developing industries and contributed to debanking of such industries to avoid pressure on the reputational risk component of the audit.
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Exactly. The purpose isn't to regulate banking. It's again bending the rules to accommodate an industry that doesn't live in the real world.

It is utterly crazy how crypto has gotten so much loving attention in DC despite its track record. Almost every major player in the business has faced felony charges and several have been convicted. Theft and fraud is everywhere. So what does Congress do? Hey, let's trust the people who brought us Binance and FTX to create "stablecoins."
 
lawtig02 said:
I'm going out on a limb here because you know about a million times more about this than I do, but I'm also starting to hope for a big cut in July. Yes, I know it will trigger more inflation. But we need to do something to start getting the housing market unstuck, and a substantial cut would help a lot. I also think we could use a jolt of energy with all the chaos happening around us right now.
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There are signs there may be support at the Fed for just that

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Powell Reaffirms Wait-and-See Posture on Rate Cuts, Citing Solid Economy​

Congressional hearings follow an emerging rift within the Fed on rate cuts and sharp criticism from Trump​


🎁 —> https://www.wsj.com/economy/central...d?st=5YF2CX&reflink=desktopwebshare_permalink

“Federal Reserve Chair Jerome Powell is set to tell lawmakers on Tuesday that the central bank remains focused on making sure any one-time increases in prices from higher tariffs won’t turn into an “ongoing inflation problem.”

Powell said little in prepared remarks to tee up a rate cut next month. Instead, he said solid economic activity in recent months meant officials could carefully study inflation and employment data to determine whether and when the central bank resumes lowering interest rates following a pause that has so far lasted for six months.

“For the time being, we are well positioned to wait to learn more about the likely course of the economy before considering any adjustments to our policy stance,” Powell said in remarks prepared for delivery later Tuesday before the House Financial Services Committee. Powell is set to testify on Capitol Hill over two days.…”
 
nycfan said:
The lack of regulatory concern about reputational risk has given fintechs a leg up on traditional banks and has made it hard for some industries (crypto, gun dealers, payday lenders, marijuana growers, gambling establishments, racist organizations, etc.) to obtain customary banking services, but my view is that the reputational risk component could be modified instead of eliminated as a key to the survival of a bank or other financial institution.

I suspect the biggest impact will be for the benefit of crypto companies in the immediate term as I think banks are not otherwise eager to platform some of the other socially questionable organizations they avoid under the reputational risk regulation. This change could also complicate efforts to of banks that want to terminate a customer that creates reputational risk by association for the bank (which I am sure is part of the intent from the “debanking” conspiracists who complain that law-abiding members of right wing militias and other right wing or libertarian groups can’t get or keep banking services because of the tyranny of reputational risk concerns).
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Big Banks, Worried About Being Trump’s Next Target, Race to Appease Republicans​

Texas and Oklahoma have banned some banks from state contracts, saying they discriminate against the gun and fossil-fuel industries​


🎁 —> https://www.wsj.com/finance/banking...a?st=5mscMx&reflink=desktopwebshare_permalink

“…
Banks are also worried about a bigger threat: that President Trump could turn the power of the federal government against banks, as he has with universities and big law firms.

The Trump administration is considering an executive order on “debanking,” according to people familiar with the matter.

Leaders in a growing number of conservative states have accused banks of boycotting industries for political reasons, rather than based on traditional factors such as the ability to repay debts. States including Texas and Oklahoma have blacklisted some banks from state contracts as a result. Banks say they weigh risks when deciding who to do business with and limit ties with companies for financial, legal and reputational reasons.

… Earlier this month, Citigroup met with Texas Gov. Greg Abbott to discuss the bank’s decision to end its policy of not doing business with companies that sell firearms to people under the age of 21, a person familiar with the matter said.

… Citigroup and JPMorgan updated their policies this year to clarify that they don’t discriminate on political grounds, which the banks said were already part of their existing practices. They were also among the big banks that recently left the Net-Zero Banking Alliance, an industry climate group targeted by Texas’ attorney general.

…
Goldman Sachs GS 0.95%increase; green up pointing triangle, Morgan StanleyMS 0.97%increase; green up pointing triangle, JPMorgan and Wells Fargo have removed some limitations on working with the coal sector or have been discussing whether to do so, according to people familiar with the matter. Bank of America dropped its ban on coal companies in late 2023.

A spokeswoman for JPMorgan said, “We believe understanding policymakers’ perspectives while sharing our own makes us a better bank.” Bank of America said it serves clients in the oil-and-gas industry, as well as those working in clean and renewable energy.…”
 
nycfan said:
There are signs there may be support at the Fed for just that
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Both of the governors who have been calling for rate cuts are Trump appointees who are auditioning for Powell's job. Think of it is as the equivalent of an unhinged 5th Circuit rant designed to curry favor with the president.

It is lunacy to think about cutting rates substantially in this environment. Powell is 100% correct.
 


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“… Even people who find themselves underwater on their mortgages generally don’t have a major cause for alarm, provided they can consistently make payments and keep their jobs, said Chen Zhao, an economist at Redfin.

Zhao expects a slight national home price drop of 1% by the end of the year, which might lead to more people being underwater. But she said that a surge in foreclosures was unlikely. The more stringent lending practices ensure that homeowners are typically able to handle financial fluctuations...”
 
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