​Due to weather conditions, beginning on September 14, 2021 and until further notice, our Houston Four Oaks banking center lobby will be temporarily closed. Please visit the drive thru or the Westway banking center at 4424 West Sam Houston Parkway N. Suite 170, Houston, TX 77041 for all in-person banking needs.

We have scheduled enhancements for our website platform on Tuesday, September 14th, starting at 5:30 PM CST to approximately 7:00 PM CST. During this time, our website may not be available and/or may have reduced functionality.

Fed Meeting — September 22, 2021

 

Fed Meeting

22 September 2021

Statement 

The two-day FOMC meeting concluded this afternoon. As expected, the Fed kept short term rates unchanged. The Committee updated its press release to state that “a moderation in the pace of asset purchases may soon be warranted.” This “tapering” of the Fed’s program of buying Treasury and mortgage securities purchases has been hinted at for months.  The program has purchased $120 billion per month of bonds over the last year, growing the Fed’s balance sheet and keeping a lid on interest rates.

The Fed is watching employment and inflation to guide its decision as to when to reduce its bond purchases. Inflation has exceeded the Fed’s 2% target for a number of months and the Fed is comfortable with current levels. September’s job report, surveyed the week of the 12th , will be released October 8th. The next two Fed meetings are November 2-3 and December 14-15. If the September jobs report has a big jump over the last several months’ average of 570,000, then there is a high probability the Fed will proceed and announce a tapering schedule. 

The Committee press release indicated that the economy has slowed somewhat thanks to the delta variant. Inflation is “elevated” due to transitory effects. Heeding the short-term effects of the variant, the Committee lowered 2021 GDP outlook to 5.9% from 7%. It also forecasts inflation holding above 4% for the rest of the year, versus 3.4% in their June report. 

Comment

We do raise our eyebrows a bit at the “transitory” inflation stance by the Committee. Forecasting 4% for the full year and a very optimistic 2.2% for 2022 may be a bit too rosy. Food increases are just now making their way into consumer prices and housing increases are coming. Shortages in just about every product are projected to continue into next year. Instead of “lower for longer” we may have “less for longer” while “paying more for longer.”

The Committee members’ rate expectations, called the “dot plot,” shows that half of the group thinks that short-term rates will rise for the first time in 2022. The Fed had been firm earlier in the year that there would be no increases until 2024. 

Summary

The current FOMC leadership has done an admirable job of telegraphing its policy moves and being deliberate about implementing them. That they are one step closer to reducing bond purchases and recognizing a strong economy may require slightly higher interest rates is thus no surprise. At this writing markets are taking the news in stride. 

Thank you for trusting our team, and please let us know if you have any questions.
 


Advisory services are offered through Texas Capital Bank Wealth Management Services, Inc. d/b/a Texas Capital Bank Private Wealth Advisors ("PWA"), a wholly owned subsidiary of Texas Capital Bank (“the Bank”) and an investment adviser registered with the U.S. Securities and Exchange Commission (“SEC”).  SEC registration does not constitute an endorsement of the advisory firm by the SEC nor does it indicate that the advisory firm has attained a particular level of skill or ability.  Brokerage services are offered through Kingswood Capital Partners, LLC (“Kingswood”), Member FINRA/SIPC. Texas Capital Bank Private Wealth Advisors and the Bank, are not registered broker/dealers and are independent of Kingswood. Investments and insurance products are not insured by Bank insurance, the FDIC or any other government agency; are not deposits or obligations of the Bank; are not guaranteed by the Bank; and are subject to risks, including the possible loss of principal. Nothing herein is intended to constitute an offer to sell or buy, or a solicitation of an offer to sell or buy securities.



The S&P 500 is an unmanaged index of 500 widely held stocks that is generally considered representative of the U.S. stock market. Dow Jones Industrial Average (DJIA), commonly known as “The Dow” is an index representing 30 stocks of companies managed by S&P Dow Jones Indices. The Russell 2000 Index is an unmanaged index of small cap securities maintained by FTSE Russell, a subsidiary of the London Stock Exchange Group.  The NASDAQ Composite Index is an unmanaged index of all stocks traded on the NASDAQ over-the-counter market. The MSCI EAFE (Europe, Australasia, and Far East) is a free float-adjusted market capitalization index that is designed to measure developed market equity performance, excluding the United States & Canada. The EAFE consists of the country indices of 21 developed markets. The MSCI Emerging Markets is designed to measure equity market performance in 24 emerging market countries. The index's three largest industries are materials, energy, and banks. The Barclays U.S. Aggregate Bond Index is an unmanaged index of domestic investment-grade bonds, including corporate, government and mortgage-backed securities. The ICE Merrill Lynch Intermediate 3 to 15 year Investment Grade Municipal Index measures the performance of municipal bonds with maturities between three and fifteen years.  Inclusion of these indices is for illustrative purposes only. Individuals cannot invest directly in any index, and index performance does not include transaction costs or other fees, which will affect actual investment performance. Accordingly, comparisons against the indices may be of limited use.

Texas Capital Bank Private Wealth Advisors (“TCBPWA”) offers investment advisory services and is registered with the U.S. Securities and Exchange Commission (“SEC”). Registration with the SEC and other state securities authorities as a Registered Investment Adviser does not imply a certain level of skill or training nor does it constitute an endorsement of the advisory firm by the SEC or other state securities authority. All content available on this email is general in nature, not directed or tailored to any particular person, and is for informational purposes only. Neither this email nor any of its content is offered as investment advice and should not be deemed as investment advice or a recommendation to purchase or sell any specific security. The information contained herein reflects the opinions and projections of TCBPWA as of the date hereof, which are subject to change without notice at any time. TCBPWA does not represent that any opinion or projection will be realized.  The information contained herein has been obtained from sources considered reliable, but neither TCBPWA nor any of its advisors, officers, directors, or affiliates represents that the information presented on this email is accurate, current or complete, and such information is subject to change without notice. The information contained in this email does not purport to be a complete description of the securities, markets, or developments referred to in this material.  Any performance information must be considered in conjunction with applicable disclosures. Past performance is not a guarantee of future results. Neither this email nor its contents should be construed as legal, tax, or other advice. Individuals are urged to consult with their own tax or legal advisors before entering into any advisory contract.