Euromoney (October Issue)
“Rates will rise as the Fed begins tapering. “Short-term interest rates will rise to 3% over the next two to three years, with the 10-year and 30-year rate likely to reach the 6% range,” according to Mike Niedermeyer of Wells Fargo Asset Management. He adds, “I think people will be surprised by the relative performance of equities over fixed income. Past decisions have forced a correlation between fixed income and equities but we could now have a return to negative correlation between fixed income and equities.”
Tags: Correlation, Equities, Fed, Fixed income, Interest rates, Niedermeyer, Performance, Tapering, Wells Fargo
Washington Post (September 19)
The massive economic power of the Federal Reserve again moved markets this week. “This much Fed power is not in the long-term interest of the U.S. economy, nor that of the world. We say this not because the Fed’s policies under Mr. Bernanke have been wrong. To the contrary, taking interest rates to zero was aggressive but appropriate in the face of an epic recession…. Yet the Fed’s huge role represents more responsibility for the economy than a single technocratic institution — or any one fallible, unelected official, even a dedicated, talented one such as Mr. Bernanke — should bear for too long.”
Tags: Aggressive, Ben Bernanke, Bernanke, Economy, Federal Reserve, Institution, Interest rates, Power, Recession, Responsibility, U.S.
Wall Street Journal (June 18)
“It is easier to get on the bull than to get off.” Financial markets have been lurching at the mere hint of change by the Federal Reserve. “The biggest question about the Fed’s policy of near-zero interest rates and unlimited quantitative easing has always been: What happens when the music stops?… Our view is that the sooner the Fed begins to unwind, the better.”
Financial Times (March 11)
“Welcome back, Mrs Watanabe. The mythical keeper of Japan’s household savings has spent a long time in retreat, selling a net Y3.6tn of foreign securities over the past 18 months amid a strong yen and weak overseas prospects. But as the effects of “Abenomics” start to trickle down to consumers and private investors in the world’s third-largest economy – and as global recovery hopes brighten – this canny player of global currencies and interest rates has begun to stir once more.”
Tags: Abenomics, Currencies, Interest rates, Investors, Japan, Mrs. Watanabe, Securities
The Economist (February 23)
“With short-term interest rates still stuck near zero and their balance-sheets stuffed with government bonds, the central banks of America, Britain and Japan are experimenting with a shift in approach: coupling monetary action with commitments designed to alter the public’s expectations of interest rates, inflation and the economy…. A more doveish stance would entail tolerating higher inflation, at least temporarily, in pursuit of higher output.” But there is “a question-mark over what this wave of central-bank experimentation can achieve: since bond yields are already so low, the marginal return to coaxing them even lower may be scant. For now, though, buoyant stockmarkets are giving the activists the thumbs-up.”
Tags: Bonds, Central banks, Inflation, Interest rates, Japan, Output, Stockmarkets, U.S., UK, Yields
Institutional Investor (September 5)
GDP targeting may be “the real message from Jackson Hole.” At this annual meeting of central bankers a paper presented by Michael Woodford advocated GDP targeting. “The Fed has already promised to keep rates low through 2014, but if it were to switch gears, it would instead promise to keep rates low indefinitely, until nominal GDP, or GDP adjusted for inflation, was showing clear signs of a recovery.”
Tags: Central bankers, Fed, GDP targeting, Inflation, Interest rates, Jackson Hole, Michael Woodford
Bloomberg (June 8)
“The Fed ought to get off the fence…. Bernanke and his colleagues should decide on a new program of monetary easing…. We think the case is stacked pretty strongly in favor of more quantitative easing— the Fed’s unorthodox (and controversial) method for driving long-term interest rates lower by buying government debt.”
Tags: Bernanke, Debt, Fed, Interest rates, Quantitative easing, U.S.
