Level 1 - Absolute Beginner
The Federal Reserve is the bank for the US bank system. It sets how costly it is to borrow money.
On Wednesday it shared notes from its last meeting. The notes show that leaders think one more rate rise may come this year.
They do not plan to do it in October. Many people on Wall Street agree.
On Wednesday the stock market ended lower. A long rise of five days stopped.
- Federal Reserve
- The central bank of the United States.
- rate
- The price you pay to borrow money.
- borrow
- To take money and pay it back later.
- notes
- Written records of what was said.
- meeting
- A time when people come together to talk.
- stock market
- A place where people buy and sell parts of companies.
- lower
- Smaller or less than before.
- year
- Twelve months.
Level 2 - Elementary
On Wednesday the Federal Reserve released the minutes of its September meeting. Minutes are a written record of what leaders discussed.
The minutes show that officials leaned toward one more interest rate increase before the end of the year. They also said there was no urgency to act in October. Every policymaker had supported the rate increase made last month.
The bond market was in the news too. The yield on the 10 year Treasury note reached 5.36 percent, a 24 year high. Later it fell back after the government sold 39 billion dollars of 10 year notes at a yield of 5.3 percent. That sale went better than people expected.
US stocks ended the day lower. The Dow, the S&P 500 and the Nasdaq all fell, and a five day winning streak came to an end. The S&P 500 and the Nasdaq had been at record highs.
- minutes
- The official written record of a meeting.
- interest rate
- The cost of borrowing money, shown as a percent.
- policymaker
- A person who helps decide rules or plans.
- yield
- The yearly return an investor gets from a bond.
- Treasury note
- A loan that investors make to the US government.
- auction
- A sale where buyers compete on price.
- winning streak
- A run of good results one after another.
- record
- The highest level ever reached.
Level 3 - Intermediate
The minutes of the Federal Reserve's September meeting, published on Wednesday afternoon, showed officials leaning toward one more rate increase before the end of the year while signalling no urgency to move in October. Every policymaker had backed the quarter point increase approved last month.
Markets have been recalibrating. A weak September jobs report, with payrolls up by only 29,000 and unemployment at 4.2 percent, sharply cut the odds that traders attach to an October hike, which fell from above 60 percent to about 22 percent in a week, according to CME FedWatch.
Bond investors were more jittery. The 10 year Treasury yield touched 5.36 percent, a 24 year high, before retreating when a 39 billion dollar auction of 10 year notes cleared at 5.3 percent and drew stronger demand than feared. Oil prices lifted by the Middle East conflict, earlier tariff increases and the spending boom on artificial intelligence all feed the inflation worries behind those yields.
Equities slipped. The Dow, the S&P 500 and the Nasdaq closed lower, ending a five day winning streak, after the S&P 500 and the Nasdaq retreated from records.
- recalibrating
- Adjusting expectations or settings to fit new facts.
- payrolls
- The number of people employed by businesses.
- quarter point
- One quarter of one percentage point.
- jittery
- Nervous and unsettled.
- cleared
- Sold at a given price, as in an auction.
- equities
- Shares of companies traded on markets.
- tariff
- A tax on imported goods.
- inflation
- A general rise in prices over time.
Level 4 - Advanced
The minutes of the Federal Reserve's September meeting, released on Wednesday afternoon, offered a study in calibrated ambiguity. Officials leaned toward one further increase before year end, yet conveyed no sense of urgency about October, and every policymaker had endorsed the quarter point rise approved last month.
The timing owes much to the data. A September jobs report showing payroll growth of only 29,000 and unemployment edging up to 4.2 percent drained conviction from the case for an immediate move, and CME FedWatch pricing for an October hike slid from roughly 64 percent to 22 percent in a week.
The bond market, meanwhile, refused to be soothed. The 10 year Treasury yield reached 5.36 percent, a level unseen in 24 years, before easing as a 39 billion dollar auction cleared at 5.3 percent on sturdier demand than the trade had feared. Analysts point to a combustible mix: oil lifted by the Middle East conflict, the lingering effect of tariffs and an artificial intelligence investment boom that keeps financing needs high.
Equities took the hint. The Dow, the S&P 500 and the Nasdaq all finished lower, bringing a five day advance to a halt and pulling the S&P 500 and the Nasdaq back from record highs.
- calibrated
- Carefully adjusted to a particular degree.
- ambiguity
- Uncertainty about meaning or intention.
- conveyed
- Communicated.
- endorsed
- Publicly supported.
- conviction
- A firm belief.
- soothed
- Calmed.
- sturdier
- Stronger and more solid.
- combustible
- Likely to cause an explosive reaction.
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