6 Jun 2013
Flash: What will the Fed do, not what should it do? - BBH
FXstreet.com (Barcelona) - Brown Brothers Harriman analysts comment that as investors, they are more interested in what the Fed will do rather than what they, or someone else thinks the Fed ought to do.
They feel that the preferred measure of inflation is near record lows and labor market conditions have eased. Further, it was always understood by Fed officials that QE could ignite excess speculation in other markets. They write, “Surely in the past couple of weeks, whatever froth there was has been reduced. The S&P 500 is off about 4.75% from its late May high. Ten-year Treasury yields are nearly 50 bp higher. This move has been echoed throughout the international capital markets.”
They feel that the preferred measure of inflation is near record lows and labor market conditions have eased. Further, it was always understood by Fed officials that QE could ignite excess speculation in other markets. They write, “Surely in the past couple of weeks, whatever froth there was has been reduced. The S&P 500 is off about 4.75% from its late May high. Ten-year Treasury yields are nearly 50 bp higher. This move has been echoed throughout the international capital markets.”