Here’s where the market is, and isn’t, pricing in a loss of Fed independence

  • 📰 MarketWatch
  • ⏱ Reading Time:
  • 72 sec. here
  • 3 min. at publisher
  • 📊 Quality Score:
  • News: 32%
  • Publisher: 97%

Business News News

Business Business Latest News,Business Business Headlines

For all the stated concern about Fed independence, it’s not easy to find signs financial market participants are losing confidence in the central bank.

European Central Bank President Mario Draghi is worried. So is Federal Reserve Governor Lael Brainard, as well as former Federal Reserve Chairwoman Janet Yellen.

In Washington, Draghi said he was worried about central bank independence in other countries, especially “in the most important jurisdiction in the world.”Brainard said the central bank favors “fact-based intellectually coherent arguments that are based on evidence, that are consistent over time,” words intended to draw focus on Moore’s and Cain’s switch from favoring higher interest rates when unemployment was high, to now calling for lower interest rates with unemployment low.

Inflation expectations, as derived from 5-year Treasury- TMUBMUSD05Y, +1.22% and inflation-protected securities, stood at 2%, which is right at the Fed’s target and lower than the 2.3% rate it was at during the autumn. But Robin Brooks, chief economist at the Institute of International Finance, says the recent strength of the dollar versus emerging-market countries is a puzzle since the Fed has engineered a very well publicized about-face, both on the need for further rate hikes and on bond buying. In a tweet, he said the feedback he has received indicates that the weakness in emerging-market currencies is a sign that investor confidence in the Fed has taken a hit.

Another sign, perhaps, of deteriorating confidence in the Fed is a rising risk premium — the difference in the yield on the 30-year TMUBMUSD30Y, +0.73% and the 10-year Treasury TMUBMUSD10Y, +1.49% securities is growing, rising to a nearly 18-month high.

 

Thank you for your comment. Your comment will be published after being reviewed.
Please try again later.

The FED is the greatest enemy of free markets and real capitalism. Needs to be abolished!

We have summarized this news so that you can read it quickly. If you are interested in the news, you can read the full text here. Read more:

 /  🏆 3. in BUSİNESS

Business Business Latest News, Business Business Headlines

Similar News:You can also read news stories similar to this one that we have collected from other news sources.

Stock market set to drift higher as investors await inflation data, Fed minutesU.S. stock-index futures point to modest open gains on Wednesday as investors brace for a trio of developments, including an important reading of inflation, and updates from European and U.S. central banks.
Source: MarketWatch - 🏆 3. / 97 Read more »