Over the past couple of weeks, I suggested that the bearish action in stocks might reflect investors’ concern that the central banks have run out of ammo. I corrected that assessment on Thursday, October 16, arguing that they still have bullets, but they may be blanks. The rally late last week suggests that even if they are blanks, investors are happy as long as the central banks keep firing them and make lots of noise.
How else to explain that Thursday’s rebound from the lows was triggered by a comment from FRB-St. Louis President James Bullard that the Federal Reserve should consider extending its bond-buying program, currently at $15 billion per month, beyond October due to the market selloff to see how the US economic outlook evolves. Yet in his interview with Bloomberg News, he also said he still believes that the FOMC should start raising the federal funds rate in March of next year.
How else to explain that Thursday’s rebound from the lows was triggered by a comment from FRB-St. Louis President James Bullard that the Federal Reserve should consider extending its bond-buying program, currently at $15 billion per month, beyond October due to the market selloff to see how the US economic outlook evolves. Yet in his interview with Bloomberg News, he also said he still believes that the FOMC should start raising the federal funds rate in March of next year.
No comments:
Post a Comment
Note: Only a member of this blog may post a comment.