Market Monitoring at the New York Fed

Transcription

1 Market Monitoring at the New York Fed October Internal FR

2 Markets Group Mission and Objectives Manages the size and composition of the Federal Reserve System's balance sheet consistent with the directives and the authorization of the FOMC. Executes the lender of last resort function for the second district and provides collateral management services on behalf of the Federal Reserve System. Provides debt issuance, debt management, and foreign exchange services to the U.S. Treasury. Provides a range of financial account services to foreign and international monetary authorities. Monitors and provides rigorous analysis of financial market developments to policymakers in order to foster effective monetary policy decisions and to promote financial stability. 2

3 Market Monitoring Role of FRBNY Unique role of the FRBNY: relationship with the sell side and buy side community, trading experience, information access Act as the eyes and ears in the financial market for the Federal Reserve System and the Treasury Department in support of monetary policy, foreign exchange policy, debt management policy, and financial stability. Primary Audience Federal Reserve Board of Governors (Monetary Affairs & International Finance) FOMC Regional Banks throughout the Federal Reserve System Treasury Department Office of Financial Research 3

4 FRBNY Market Monitoring Mandate Monetary Policy Expectations for near- and longer-term policy actions Market reaction to recent policy developments Monetary policy execution Economy Financial conditions Global monetary policy, exchange rate, and macroeconomic developments Foreign Exchange and Debt Management Foreign exchange intervention Expectations for U.S. fiscal policy, Treasury issuance, and auction results Global sovereign issuance trends, debt management practices, and policies Financial Market Stability Risk scenarios and possible shocks Risk appetite, risk management, and market psychology Transmission effects Liquidity, market functioning, market infrastructure 4

5 Market Monitoring: Who is involved? Over 50 analysts involved in both market monitoring and market transactions 3-6 month training program on market monitoring & analysis Experienced analysts asked to be both generalists and specialists. Market monitoring is conducted on a rotational schedule 5

6 Market Monitoring: Who is involved? Multiple staffs on the Open Market Desk, a.k.a. the Desk Market Operations Monitoring & Analysis Cross-Asset Market Monitoring and Analysis Domestic Money Markets International Markets Operations & Analysis Cross Portfolio Policy & Analysis Mortgage Markets Treasury Market Policy Cross Market Monitoring Secured Money Markets Global Foreign Exchange & Commodities Monitoring & Outright Trading Interest Rates & Volatility Capital Markets Policy Expectations Unsecured Money Markets International Money & Capital Markets Structure & Liquidity Structure & Liquidity Analytical Development Treasury Auctions 6

7 Market Monitoring: How is it Done? Monitor global asset prices and data through Bloomberg & custom analytical tools Active discussion with a wide range of market participants throughout day Access to a broad range of market data & analysis 7

8 Market Monitoring: Analytical Tools 8 8

9 Market Monitoring: More Analytical Tools 9

10 Market Monitoring: A Typical Day 4:00 am Analysts begin coverage of overnight developments 6:00 am Brief update on overnight developments 7:45 am Analysis of overnight developments published on Markets Group internal website, MarketSOURCE 9:20 am Conference call with FOMC participants and Board Staff 1:30 pm Second conference call with Federal Reserve Board and Treasury Department 5:00 pm Analysis of U.S. market developments published on MarketSOURCE Other market monitoring deliverables: Several briefings per month with FRBNY executive management Ad-hoc analysis on specific markets or events as warranted 10

11 Market Monitoring & Analysis Products: Longer-term analysis Market updates: Focus on an asset class, investor group, or geography with the purpose of summarizing recent price action, important events, or other developments of interest to policymakers. Market themes and risks: Undertake analysis that are larger in scope, addressing issues of most relevance to policy makers and assessing market vulnerabilities, respectively. Includes contributions to Federal Reserve system work on financial stability. Primers are intended to serve as relatively timeless pieces that can educate our audience on a variety of topics. 11

12 MarketSOURCE MarketSOURCE publications are circulated throughout the Federal Reserve system and Treasury Department. 12

13 Primary Dealer Survey & Survey of Market Participants

14 The Investor Advisory Committee on Financial Markets Sample Questions Domestic Developments What are your views on the growth, labor market, and inflation outlook? What are your expectations for monetary policy normalization? How do you expect various asset classes to respond to liftoff? Global Developments What is your outlook for emerging markets? How do you expect emerging market asset prices to respond to liftoff by the Federal Reserve and what are the implications for global financial markets? Financial Landscape/Outlook What is your assessment of global corporate credit conditions? What are the near-term risks to the asset class? 14

15 BIS : Market Intelligence (MI) Gathering MI is recognized by all members of the markets committee as an important input to policy analysis and operations However, notable variations in how MI is gathered and what markets are covered Variations are in degree of formality and structure of central banks MI functions Currencies and money markets most prevalent 15

16 BIS : Why do you collect market intelligence (MI)? 16

17 BIS : What is the breakdown of responsibilities, in percentage terms, for a typical staff member involved in MI gathering? 17

18 BIS : Please provide information on overall staffing levels. 18

19 BIS : On average, how frequently is your MI shared internally? 19

20 BIS : Does your institution have a formal training program or accreditation? 20