The markets were tossed back and forth again today as the sudden ubiquitous Fed President John Williams was letting the world know his views about curtailing the Fed’s bond purchases. Why is the Fed’s newest voice busy spouting about the bringing forward tapering of bond purchases? It seems that Williams has decided that the U.S. economy is entering a virtuous cycle of rising home values, creating increased demand for autos and other large priced consumer durables. And then let’s add in the steady rise in equity values, as well as the repaired balance sheet of consumers, which will lead to job creation and possibly inflation. The question arises: Why does John Williams’ opinion carry so much weight? Because of his previous role as a DOVE on the FED board?
Posts Tagged ‘money markets’
Notes From Underground: I’m Singing and Dancing In the Rain—the SONG OF MARIO AND BEN
August 16, 2012It seems that the ECB president has for the moment prevailed in a similar way as his MIT cohort Ben Bernanke has been “successful” with his famed Portfolio Balance Channel. Remember, it was Jackson Hole speech of August 2010 in which Chairman Bernanke laid out his view about the importance of the PBC, which was previously referred to by Alan Greenspan as the “wealth effect.” President Draghi has steepened the Spanish and Italian curves by threatening to purchase short-term debt and thus driving the Spanish and Italian 2-YEAR NOTE YIELDS more than 300 basis points lower.