WASHINGTON (MarketWatch)The sharp drop in Treasury prices is due to the market coming to realize that the Federal Reserve's asset purchase program won't go on forever and is also due to an improving economy, said Richard Fisher, the president of the Dallas Fed Bank
"I think the market has come to realize there is no QE infinity and secondly...we're seeing better numbers in the economy," Fisher said in an interview on Fox Business Network
Fisher said the Fed would discuss whether the higher rates will hurt Main Street at their next meeting in September
The Dallas Fed president is not a voting member of the Fed's policy-making panel this year
If he had one, Fisher said would have voted for the central bank to start pulling back its $85 billion per-month asset purchase program at the last meeting in July
"I think we are headed in that direction," Fisher said
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WASHINGTON (MarketWatch) - There can be no doubt that the Syrian government used chemical weapons against rebels, and President Barack Obama will decide how to respond, said U.S. Secretary of State John Kerry on Monday. The Syrian Government's decision to allow United Nations inspectors came too late, Kerry said. The U.S. is consulting with Congress and allies about what action to take in response to the "indiscriminate use of chemical weapons," Kerry said. "There must be accountability for those who would use the world's most heinous weapons against the world's most vulnerable people," he said.
Jackson Hole, Wyo. (MarketWatch) - The Federal Reserve is on track to pull back from its $85 billion-a-month asset purchase program by the end of the year, said John Williams, the president of the San Francisco Fed Bank on Friday. But in an interview on CNBC, Williams declined to speculate at which meeting the first move would come. "In my view, this has to depend on the data," Williams said in an interview on CNBC. "Specifically, are we still seeing signs of positive momentum in growth and job creation and we need to see inflation continue to edge back up to our 2% longer-run inflation goal," he said. The data since the mid-June announcement of the taper plan by Fed Chairman Ben Bernanke "have basically followed more or less my expectations on how the economy would evolve," he said. Williams said he expects the purchases will continue into the middle of next year. "So any tapering I think, we would do, would be in gradual steps," he said. Williams is not a voting member of the Fed's policy-making panel this year.
JACKSON HOLE, Wyo. (MarketWatch) - The Federal Reserve should be cautious before pulling back the pace of the $85 billion-a-month asset purchase program, said St. Louis Fed President James Bullard on Friday. "I don't think we have to be in any hurry in this situation, inflation is running low, we have mixed data on the economy," Bullard said in an interview on CNBC on the sidelines of the Fed's annual policy conference. While the labor market looks better, gross domestic product has looked "kind of weak" and inflation is low. "I think we can afford to be very deliberate in our decision making here," he said. Bullard said he wants to see some sign that inflation is at least coming back to the central bank's 2% target. Bullard is a voting member of the Fed's policy committee this year.
JACKSON HOLE, Wyo. (MarketWatch) - Atlanta Fed Bank President Dennis Lockhart said Friday that he would back a September taper of the central bank's asset purchase plan as long as data between now and the meeting show the economy on a steady growth path. "I would be supportive of a taper of September as long as the data that come in between now and then basically confirm the path we're on," Lockhart said in an interview on CNBC. "I think the key question is do we have, even at this moderate pace of growth, a sustainable picture, something that is going to continue or is there some risk economy gets knocked off its feet," he said. Lockhart said he still expects a pickup in growth in the second half of the year and into 2014, but noted there were few signs of that yet. "The data [are] not coming in a way that confirm that strong pickup," he said. Growth in the second half could accelerate to a 2.5% rate, while the jobless rate could drop to a 7.2% rate by the end of the year, he said. Lockhart is not a voting member this year. He is seen as one of the most pragmatic Fed officials and often close to the consensus. Lockhart said a showdown over the budget and debt ceiling could damage consumer confidence. He said it was too early to tell if the backup in rates would have an impact on the economy.
WASHINGTON (MarketWatch) — The U.S. labor market is getting closer to meeting the Federal Reserve’s standard for beginning a pullback in asset purchases, San Francisco Fed President John Williams said Wednesday, adding that beginning to taper “later this year” is still the best course, if economic forecasts hold true.
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John Williams.
Any policy change will depend on the unemployment rate continuing to decline and inflation being kept in check, Williams told community leaders in a speech in Portland, Ore.
“The unemployment rate and a number of other labor-market indicators, such as payroll job gains, point to continued progress in the labor market,” said Williams, who is not a voting member of the Fed’s policy-making committee. “Clearly, we are getting closer to meeting our test of substantial improvement in the labor market.”
Investors largely expect the Fed to begin to taper its $85 billion-a-month asset-purchase plan at its Sept. 17-18 meeting, but data including Friday’s nonfarm payrolls report will play a role in the bank’s decision. Analysts surveyed by MarketWatch forecast that the economy added 170,000 jobs in August — an improvement from July’s 162,000 — and that the unemployment rate held steady at 7.4%. See Economic Calendar.
The Federal Reserve
Fed seen making first taper move in September
The Federal Reserve is seen as intent on making a first, small, reduction in the pace of tis asset purchase plan in September, according to experts at the central bank’s conference in Jackson Hole.
Fed must use 'great caution' in exit: OECD chief economist
The Fed must exercise great caution in its exit strategy to avoid upsetting markets, said the OECD's chief economist.
• Fedspeak for the rest of us: Part I
• Your guide to Fedspeak: Part II
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The Fed has pledged to keep buying Treasury bonds and mortgage-backed securities until there is substantial improvement in the U.S. labor market and economic growth. The program has kept U.S. interest rates at record lows.
At their last meeting in July, Fed officials agreed that the economy will improve later this year, paving the way for the central bank to scale back its asset purchases. But they didn’t signal exactly when they’d slow down bond buying.
Williams said he’s “encouraged” by data that suggest the decline in inflation over the past 12 months will be temporary. He expects inflation to “gradually” climb toward the Fed’s 2% longer-run target over the next few years.
After Williams spoke, the Fed released its latest Beige Book, which showed that the economy grew at a “modest to moderate” pace in July and August.
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