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  • Writer's pictureStephen H Akin

Memorial Day 2024

Invites you to join in the celebration of our Veterans!

Each year we pause to honor the brave men and women who have served our nation.

“That Nation which respects and honors its dead, shall ever be respected and honored itself.”– Brevet Lieut.-Col. Edmund B. Whitman, 1868

Memorial Day, a federal holiday held the last Monday in May, is the nation's foremost annual day to mourn and honor its deceased service men and women.

Originally called Decoration Day, it was formalized by a "Memorial Day Order" issued by Grand Army of the Republic Commander-in-Chief John A. Logan in 1868.

The modern proclamition calls on Americans "to observe Memorial Day by praying, according to their individual religious faith, for permanent peace."


Upside Surprise

US S&P Global Composite PMI

The US S&P Global Composite PMI improved to 54.4 in May's flash estimate, up from 51.3, indicating that business activity in the US private sector continued to grow at a faster pace than in April.

Meanwhile, the S&P Global Manufacturing PMI increased to 50.9 from 50.0 over the same period, signalling an expansion in the manufacturing sector. Additionally, the S&P Global Services PMI rose to 54.8 from 51.3.


Labor Market Remains Strong

The quantity of Americans requesting unemployment benefits decreased last week, even though the Federal Reserve continued to attempt to loosen the labor market. Layoffs were historically low.

According to Labor Department data released on Thursday, the number of jobless claims for the week ending May 18 decreased by 8,000 to 215,000 from 223,000 the previous week.

The week-to-week volatility is somewhat mitigated by the four-week average of claims, which increased by a small 1,750 to 219,750.

A good indicator of the direction of the job market and the quantity of layoffs that occur in the United States each week is the amount of weekly jobless claims. Since the COVID-19 pandemic struck the United States in the spring of 2020 and caused millions of jobs to be lost, they have stayed at historically low levels.

1.79 million Americans overall


Minutes of the Federal Open Market Committee April 30–May 1, 2024

A joint meeting of the Federal Open Market Committee and the Board of Governors of the Federal Reserve System was held in the offices of the Board of Governors on Tuesday, April 30, 2024, at 10:00 a.m. and continued on Wednesday,

May 1, 2024, at 9:00 a.m.

Developments in Financial Markets and Open Market OperationsThe manager turned first to a review of developments in financial markets. Domestic data releases over the inter- meeting period pointed to inflation being more persis- tent than previously expected and to a generally resilient economy. Policy expectations shifted materially in re- sponse. The policy rate path derived from futures prices implied fewer than two 25 basis point rate cuts by year- end. The modal path based on options prices was quite flat, suggesting at most one such rate cut in 2024. The median of the modal paths of the federal funds rate ob- tained from the Open Market Desk’s Survey of Primary Dealers and Survey of Market Participants also indicated fewer cuts this year than previously thought. Respond- ents’ baseline expectations for the timing of the first rate cut—which had been concentrated around June in the March surveys—shifted out significantly and became more diffuse.

Treasury yields rose materially over the intermeeting pe- riod. At shorter maturities, the increase appeared to largely reflect higher inflation compensation, while at longer maturities, it was attributable mostly to a higher expected path for the real policy rate and higher real risk premiums. Model estimates suggested that inflation ex- pectations rose some, but mostly at shorter horizons. Longer-term inflation expectations appeared to remain well anchored. Broad equity prices fell over the period, as higher interest rates weighed on valuations, while re- cent earnings reports, which were generally solid, pro- vided some support. The dollar strengthened as several foreign central banks were expected to start easing policy before the Federal Reserve. Overall, higher yields and lower equity prices, together with the stronger dollar, re- sulted in a tightening of financial conditions over the pe- riod.

The manager then discussed expectations regarding bal- ance sheet policy. Respondents to the Desk surveys ex- pected a slowing in the pace of balance sheet reduction to begin soon; the median respondent projected that the slowdown would start in June, one month earlier than in the March surveys. The average probability distribution of the size of the System Open Market Account (SOMA) portfolio at the end of runoff had become a bit more concentrated, and its probability-weighted mean was slightly lower than in the March surveys. Overall, the survey results suggested that respondents’ expectations for a slowdown of balance sheet runoff had been decoupled from expectations about the timing and ex- tent of rate cuts, and that respondents understood that a slowdown in the pace of runoff was not likely to trans- late to a higher terminal size of the portfolio.

The manager then turned to money markets and Desk operations. Unsecured overnight rates were stable over the intermeeting period. In secured funding markets, rates on overnight repurchase agreements firmed some- what over the March quarter-end reporting date, in line with recent history. Market participants generally re- ported that the return of somewhat higher rates around reporting dates had not been associated with any issues in market functioning. Despite the ongoing balance sheet runoff, take-up at the overnight reverse repurchase agreement (ON RRP) facility was largely steady over the period, likely reflecting fewer attractive private-market alternatives for money market funds (MMFs) amid a re- cent reduction in Treasury bills outstanding as well as a decrease in MMFs’ weighted average maturities. ON RRP usage was also likely supported by typical month-end dynamics. The staff and respondents to the Desk’s Survey of Primary Dealers expected ON RRP take-up to decline in coming months.

The manager provided an update on reserve conditions. Over the intermeeting period, the federal funds market continued to be insensitive to day-to-day changes in the supply of reserves and suggested that reserves remained abundant. The manager discussed various other indica- tors that supported the same conclusion.

The Committee voted unanimously to renew the recip- rocal currency arrangements with the Bank of Canada and the Bank of Mexico; these arrangements are associ- ated with the Federal Reserve’s participation in the North American Framework Agreement of 1994. In ad- dition, the Committee voted unanimously to renew the dollar and foreign currency liquidity swap arrangements with the Bank of Canada, the Bank of England, the Bank of Japan, the European Central Bank, and the Swiss Na- tional Bank. The votes to renew the Federal Reserve’s participation in these standing arrangements occur an- nually at the April or May FOMC meeting.

By unanimous vote, the Committee ratified the Desk’s domestic transactions over the intermeeting period. There were no intervention operations in foreign curren- cies for the System’s account during the intermeeting period.

For the full text of the minutes of the FOMC meeting download here:

Download PDF • 384KB

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