21 May May 21, 2021
Week in Review
FOMC Minutes
This week the Fed released the minutes from its April FOMC meeting. As expected, the minutes show the Fed’s continuing commitment to its accommodative policy as the economy recovers from the effects of the pandemic. What surprised markets was the suggestion of a potential discussion at a future meeting to consider plans to taper the rate of asset purchases. Some market participants interpreted this to mean the Fed will be acting sooner than later. However, the minutes state that “substantial further progress” is needed before the current policy changes and that the committee intends to advise the market well ahead of the first planned rate hike.
Our Take: The reaction to the Fed minutes was a little overdone. At this point, the Fed is not discussing any adjustment to its policies.
Municipals
California Governor Gavin Newsom released his state budget proposal late last week. The $268 billion budget marks an increase in spending of 19% over last year according to Bloomberg. The budget must be approved by lawmakers before the June 15th deadline.
Our Take: What pandemic? California’s economy continues to rebound, tax revenues have increased, and the state is expecting federal stimulus funds. California officials are expecting a $75 billion budget surplus and the state currently has a record level of reserve funds.
All expressions of opinions are subject to change without notice in reaction to shifting market conditions. All information is based on sources deemed reliable, but no warranty or guarantee is made as to its accuracy or completeness. Neither the information nor any opinion expressed herein constitutes a solicitation for the purchase or sale of any securities and should not be relied on as financial advice.