The Board of Governors of the US Federal Reserve System wields a significant influence on markets when executing “the nation’s monetary policy to promote maximum employment, stable prices, and moderate long-term interest rates in the U.S. economy.” These decisions, whether intervening in the market through the buying or selling of treasury bonds or adjusting interest rates, have a profound impact on the financial bottom line of businesses and the quality of life of individuals.
Monetary policy
Regarding #monetarypolicy , the #FederalReserve could increase the amount of money in the economy by purchasing long-term government bonds and mortgage-backed securities with the expected outcome of lowering interest rates.
This could have the effect of “putting more money in the hands of consumers, making them feel wealthier, and thus stimulating spending,” according to an article by Anna J. Schwartz, a former economist at the National Bureau of Economic Research in New York.
The practice of purchasing long-term government bonds often referred to as “quantitative easing,” also expands the Fed’s balance sheet.
One example of this appears to be the Fed's policy decisions during #COVID-19 .

Concerning this, the Fed said:
As a response to the COVID-19 pandemic, in addition to lowering the target range for the federal funds rate to near zero and establishing emergency credit and lending facilities, the Federal Reserve began purchasing very sizable quantities of Treasury securities and agency mortgage-backed securities in order to support the smooth functioning of these markets in the spring of 2020. Thereafter, asset purchases continued at a more moderate pace to help foster accommodative financial conditions and smooth market functioning, thereby supporting the flow of credit to households and businesses.
These statements appear to coincide with the below graph on the St Louis Fed’s website showing the increase in US treasury securities held in 2020.

Following COVID-19, it appears that the Fed adjusted its purchases of long-term US Treasuries.
The Fed explained:
At the conclusion of its November 2021 meeting, the FOMC announced that, in light of the progress the economy has made toward the Committee's goals, it decided to begin reducing the pace of asset purchases. At the January 2022 meeting, the FOMC issued a statement laying out high-level principles regarding its approach to reducing the size of the Federal Reserve's balance sheet including the sequencing for removing policy accommodation with the Committee's balance sheet and interest rate tools, the approach to balance sheet runoff, and the intended longer-run size and composition of portfolio holdings.

At the May 2022 meeting, the Fed added: 
To ensure a smooth transition, the Committee intends to slow and then stop the decline in the size of the balance sheet when reserve balances are somewhat above the level it judges to be consistent with ample reserves. Once balance sheet runoff has ceased, reserve balances will likely continue to decline for a time, reflecting growth in other Federal Reserve liabilities, until the Committee judges that reserve balances are at an ample level. Thereafter, the Committee will manage securities holdings as needed to maintain ample reserves over time.”

At the May 2024 meeting, the Fed continued:
In addition, the Committee will continue reducing its holdings of Treasury securities and agency debt and agency mortgage-backed securities. Beginning in June, the Committee will slow the pace of decline of its securities holdings by reducing the monthly redemption cap on Treasury securities from $60 billion to $25 billion. The Committee will maintain the monthly redemption cap on agency debt and agency mortgage-backed securities at $35 billion and will reinvest any principal payments in excess of this cap into Treasury securities.

By reducing its holding of treasury securities, the Fed appears to be aiming to “tighten” or “contract” its balance sheet.
Where this involves selling treasuries, money may eventually be removed from the economy. The exercise could also impact interest rates.
Interest rates
Speaking of interest rates, the Fed can increase or decrease interest rates or leave them the same.
A summary of the Fed's 2023 to 2024 interest rate decisions is as follows:
February 1, 2023
Inflation has eased somewhat but remains elevated.Russia’s war against Ukraine is causing tremendous human and economic hardship and is contributing to elevated global uncertainty. The Committee is highly attentive to inflation risks.The Committee seeks to achieve maximum employment and inflation at the rate of 2 percent over the longer run.In support of these goals, the Committee decided to raise the target range for the federal funds rate to 4-1/2 to 4-3/4 percent.

March 22, 2023
...the Committee decided to raise the target range for the federal funds rate to 4-3/4 to 5 percent.

May 3, 2023
...the Committee decided to raise the target range for the federal funds rate to 5 to 5-1/4 percent.

September 20, 2023
...the Committee decided to maintain the target range for the federal funds rate at 5-1/4 to 5-1/2 percent.

November 1, 2023
...the Committee decided to maintain the target range for the federal funds rate at 5-1/4 to 5-1/2 percent.

December 13, 2023
...the Committee decided to maintain the target range for the federal funds rate at 5-1/4 to 5-1/2 percent.

January 31, 2024
...the Committee decided to maintain the target range for the federal funds rate at 5-1/4 to 5-1/2 percent.

March 20, 2024
...the Committee decided to maintain the target range for the federal funds rate at 5-1/4 to 5-1/2 percent.

May 1, 2024
Recent indicators suggest that economic activity has continued to expand at a solid pace. Job gains have remained strong, and the unemployment rate has remained low. Inflation has eased over the past year but remains elevated. In recent months, there has been a lack of further progress toward the Committee’s 2 percent inflation objective.The Committee seeks to achieve maximum employment and inflation at the rate of 2 percent over the longer run. The Committee judges that the risks to achieving its employment and inflation goals have moved toward better balance over the past year. The economic outlook is uncertain, and the Committee remains highly attentive to inflation risks.In support of its goals, the Committee decided to maintain the target range for the federal funds rate at 5-1/4 to 5-1/2 percent.

The Fed’s above approach to interest rates is important because some banks increase customers’ mortgage rates each time the Fed increases rates.  Customers who have mortgages with variable interest rates end up paying more, which could take them over the financial edge.
When the Fed decided to maintain interest rates in the last quarter of 2023, this was welcoming to mortgage customers because they were spared an additional financial blow.
Moving onto 2024, some investors and mortgage customers believed that the Fed would start to lower interest rates.
However, as of May 2024, the Fed has not lowered interest rates, and the sentiment is that they may not do so until the last quarter of 2024.
This is probably the case because there is likely a time lag between the Fed’s decisions and actual changes in economic conditions and the Fed is waiting for evidence of the impact of their policy decisions.
Further, the Fed previously noted that they “will take into account a wide range of information, including readings on labor market conditions, inflation pressures and inflation expectations, and financial and international developments.”
Such international developments may include ongoing (Ukraine) or future wars (China), which may lead to uncertain economic impacts.
Big players like Jamie Dimon, CEO of JP Morgan, have also made observations about geopolitics.
In an interview with Andrew Ross Sorkin of The New York Times at the annual DealBook Summit,  Dimon said:
You know, if you look at history and you open a newspaper of any month of any year, of course, there's always tough stuff going on, wars and depressions and recessions.But if you look at this time and what's happening in Ukraine, a 600 miles front, free and democratic european nation, 600,000 casualties, huge humanitarian crisis, NATO on the border of NATO, nuclear blackmail, and it's affecting all oil and gas migration, food costs, and all international military and economic relationships.That's pretty tough.

Dimon added:
Now, hopefully it all goes away.But if you look at the history of battles like this, they're unpredictable.You don't know the full effect.

Dimon’s comments (some of which he repeated in a Wall Street Journal interview) underline that investors should consider the impacts of geopolitical events on their market investments. 
For example, a war could reduce the supply of oil and increase oil prices or the prices of other commodities depending on where the conflict occurs.
This uncertainty may explain the Fed’s current stance of not yet lowering rates in 2024, even though recent indicators of improving inflation may suggest otherwise.
Whatever happens next, investors may also start considering whether treasuries (which can be bought or sold by the Fed) remain the right safety net during bad times or whether #bitcoin☀️ will be an option.

In a recent announcement on Friday afternoon, Pfizer (NYSE: PFE), the world's largest pharmaceutical company, revealed the discontinuation of a two-day obesity drug trial, leading to a sharp decline in its shares by over 6%. The drug, named danuglipron, faced termination due to reported side effects observed in a previous study, causing Pfizer's stocks to plummet by 44.2% since the beginning of the year.
Pfizer Abandons Obesity Drug Trial Amidst Adverse Effects:
The decision by Pfizer to forego the Phase 3 trials of its obesity drugs, formulated for twice-daily administration, stemmed from the numerous adverse effects experienced by participants in an earlier study. The company cited the drug, danuglipron, and its discontinued trial due to the side effects emerging from a Phase 2b study, indicating statistically significant weight loss compared to a placebo.
"Danuglipron demonstrated weight reductions ranging from -8% to -13% over 32 weeks and -5% to -9.5% over 26 weeks compared to placebo," stated Pfizer in a press release.
Market Response: Pfizer Stocks Experience Sharp Decline:
As the news broke, Pfizer's shares experienced a rapid decline, reaching $28.58 and marking a nearly 45% loss since the beginning of the year. This downturn is attributed to a swift decrease in sales, driven by a decline in demand for Pfizer's COVID-19 products amid the global post-pandemic recovery. The company reported losses in Q3 due to challenges surrounding its COVID-19 vaccine and antiviral treatment, Paxlovid.
Ongoing Trends in Obesity Drugs: Novo Nordisk and Eli Lilly Lead the Way:
While Pfizer faces setbacks, the market for obesity and diabetes treatments continues to evolve, with Novo Nordisk and Eli Lilly at the forefront. Novo Nordisk's Wegovy, Eli Lilly's Ozempic, and Mounjaro have set a trend with injectable medications that mimic the effects of a gut hormone to regulate appetite and blood sugar.
Novo Nordisk's Success with Wegovy and Ozempic: Novo Nordisk's Wegovy and Ozempic have been key drivers of the company's growth, with their shares rising by 48% and 64.31%, respectively. These GLP-1 receptor agonists have gained approval in the United States for the treatment of type 2 diabetes, showcasing their effectiveness in managing both diabetes and obesity.Eli Lilly's Mounjaro and Zepbound, and the FDA Approval for Weight Management: Eli Lilly's Mounjaro, similar to Novo Nordisk's Ozempic, and Zepbound, akin to Mounjaro, have received approval from the U.S. Food and Drug Administration (FDA) not only for the treatment of type 2 diabetes but also for weight management. This dual approval positions these medications as versatile solutions for patients struggling with both conditions.

While Pfizer grapples with the discontinuation of its obesity drug trial, competitors Novo Nordisk and Eli Lilly continue to thrive in the evolving landscape of obesity and diabetes treatments. The industry's focus on innovative solutions reflects a commitment to addressing the complex challenges of these prevalent health conditions, providing hope for improved outcomes for patients in the future.
#Pfizer #NYSE #PFE #COVID-19