The Fed's Emergency Bank-Funding Program Is Starting to Wind Down By Hardika Singh

Good morning. Another inflation reading this morning at 8:30 a.m. ET should provide insight into how soon the Federal Reserve could start winding down its tightening campaign. Now on to today's news and analysis.

Top News The Fed's Emergency Bank-Funding Program Is Starting to Wind Down

Nature is healing: The emergency facility the Federal Reserve created to stem last year's regional-banking crisis sunset this week. The bank term funding program will stop making new loans, though existing participants can lock in borrowing for the next 12 months.

U.S. Economy U.S. Jobs Market Lost Pace in February, Conference Board Says

The U.S. labor market weakened a little in February , reflecting that jobs were becoming harder to come by, according to a jobs trends index. The Conference Board's employment trends index ticked down to 112.29 in February from a downwardly revised 113.18 in January, the private-research group said Monday, flipping two months of improvement.

Vinyl Is Back But Hand Gel Is Out as the U.K. Freshens Its Price Measures

Hand-sanitization gel will no longer help gauge inflation in the U.K. as the Covid-19 pandemic recedes, part of an updated basket that also reflects a trend toward healthier lifestyle and renewed interest in vinyl records.

More Americans Are Treating Their 401(k)s Like Cash Machines

The 401(k) is doing double duty as both a retirement account and a source of emergency funds for more Americans. A record share of 401(k) account holders took early withdrawals from their accounts last year for financial emergencies, according to internal data from Vanguard Group. Overall, 3.6% of its plan participants did so last year, up from 2.8% in 2022 and a prepandemic average of about 2%.

Financial Regulation Roundup White House Forecasts Somewhat Higher Interest Rates

President Biden signaled optimism during a campaign event last week that the Federal Reserve was going to cut interest rates soon. The economic forecasts in his budget released Monday offer a different message: curb your enthusiasm.

Forward Guidance Tuesday (all times ET)

6 a.m.: NFIB Small Business Optimism Index

8:30 a.m.: Consumer price index

2 p.m.: Monthly U.S. federal budget

Research Changes in Fed's Balance Sheet Expected to Be Gradual

Investors are watching discussions around the U.S. Fed's balance sheet policies, but markets could be overreacting as changes will likely be applied slowly over time, Bank of America economists say in a report. They expect no change in the weighted average maturity of Fed holdings this year. BofA sees various ways in which the Fed could move toward a larger share of shorter-term holdings as officials have indicated they want to. "We suspect that the Fed is not looking to move markets with a shorter WAM but instead wants a nimbler portfolio over time," the economists say. "If that's the case, the widening in 2y spreads...is likely overdone."

- Paulo Trevisani

Basis Points U.S. freight demand is showing signs of rebounding. The closely-watched Cass Freight Index advances 2% from January to February to its highest level since March 2023. The seasonally-adjusted measure was still down 4.8% on an annual basis, but the sequential improvement comes amid other signals that American retailers have turned the corner on destocking efforts and are pushing more goods through supply chains. - Paul Page The Bank of England could face wage growth and domestic inflation above its forecasts when the U.K. pushes up the minimum wage in April, Capital Economics U.K. economist Ashley Webb says in a note. - Edward Frankl Feedback Loop

This newsletter is compiled by Hardika Singh in New York.

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This article is a text version of a Wall Street Journal newsletter published earlier today.


(END) Dow Jones Newswires

03-12-24 0716ET