Video | Agriculture | Confidence | Economy | Energy | Employment | Finance | Media | Property | RBNZ | Science | SOEs | Tax | Technology | Telecoms | Tourism | Transport | Search

 


While you were sleeping: Fed opens taper door

While you were sleeping: Fed opens taper door

May 23 (BusinessDesk) – US stocks and bonds fell, both giving up earlier gains, after Federal Reserve chief Ben Bernanke suggested the central bank might scale back stimulus measures as early as at its next meeting.

“If we see continued improvement and we have confidence that that is going to be sustained, then we could in—in the next few meetings, we could take a step down in our pace of purchases,” Bernanke said in response to a question from the Joint Economic Committee of Congress in Washington after his prepared testimony.

In late afternoon trading in New York, the Dow Jones Industrial Average fell 0.36 percent, the Standard & Poor's 500 Index dropped 0.42 percent, while the Nasdaq Composite Index sank 1 percent. Yields on US 10-year notes climbed 10 basis points to 2.02 percent.

“The market seized upon the bit of the Q&A exchange about the anticipated timeframe about an adjustment to QE,” Christopher Sullivan, chief investment officer at United Nations Federal Credit Union in New York, told Bloomberg News. “The Fed remains highly data dependent. The market is very skittish right now.”

Earlier in the session, the Dow had risen to a record 15,542.40 and the S&P 500 climbed to a high of 1,687.18.

"This is a very sensitive market and particularly sensitive to any notion that tapering will come too soon," Quincy Krosby, market strategist at Prudential Financial in New York, told Reuters.

"No one wants to be selling if the data reaches the point when the Fed begins to specifically talk about tapering. The market doesn't wait for the Fed to move. It will move before. That's how it operates," Krosby said.

Bernanke's testimony to the committee had stressed concern about the recovery and risks of tapering too soon.

"In the current economic environment, monetary policy is providing significant benefits," Bernanke said. "Recognising the drawbacks of persistently low rates, the FOMC actively seeks economic conditions consistent with sustainably higher interest rates. Unfortunately, withdrawing policy accommodation at this juncture would be highly unlikely to produce such conditions."

The Fed is buying US$85 billion in fixed-income securities a month to help revive the pace of growth in the world's largest economy.

Bernanke warned that a "premature tightening of monetary policy … would also carry a substantial risk of slowing or ending the economic recovery."

Minutes from the latest FOMC meeting also showed concern about the pace of growth.

"Participants generally saw the economic outlook as little changed since they met in March," according to the minutes from the FOMC's April 30-May 1 meeting. "However, economic data releases over the intermeeting period were mixed, raising some concern that the recovery might be slowing after a solid start earlier this year, thereby repeating the pattern observed in recent years."

Europe's benchmark Stoxx 600 Index advanced 0.2 percent. National benchmark indexes in Paris, London and Frankfurt also rose, gaining 0.4 percent, 0.5 percent and 0.7 percent respectively.

European shares were lifted by the initial positive reaction to Bernanke's comments, closing before the Fed chairman put a potential 'sooner than expected' timeframe on tapering bond buys.

(BusinessDesk)

© Scoop Media

 
 
 
 
 
Business Headlines | Sci-Tech Headlines

 

Royal Society: Review Finds Community Water Fluoridation Safe And Effective

A review of the scientific evidence for and against the efficacy and safety of fluoridation of public water supplies has found that the levels of fluoridation used in New Zealand create no health risks and provide protection against tooth decay. More>>

ALSO:

Scoop Business: Croxley Calls Time On NZ Production In Face Of Cheap Imports

Croxley Stationery, whose stationery brands include Olympic, Warwick and Collins, plans to cease manufacturing in New Zealand because it has struggled to compete with lower-cost imports in a market where the printed word is giving way to electronic communications. More>>

ALSO:

Prefu Roundup: Forecasts Revised, Surplus Intact

The National government heads into the election with its Budget surplus target broadly intact, delivering a set of economic and fiscal forecasts marginally revised from May to reflect weaker commodity prices and a lower tax take. More>>

ALSO:

Convention Centre: Major New SkyCity Hotel And Laneway For Auckland

Today SKYCITY Entertainment Group Limited revealed plans to build a new hotel and pedestrian laneway of bars, restaurants and boutique shopping on land it owns in the Nelson and Hobson Streets block, expanding the SKYCITY Entertainment Precinct. More>>

ALSO:

Igniting The Spark: Bringing The Digital Enabler To Life

Changing a name is, relatively speaking, the easy part of a re-invention. Changing a culture, getting all the ducks in a row, turning yourself inside-out to become customer-inspired is a much bigger challenge. More>>

ALSO:

Ebola And NZ: Targeted Screening At Airport But Risk Low

The risk of any cases of Ebola in New Zealand remains very low, but health and border authorities are well prepared... anyone arriving in New Zealand who in the last three weeks has visited countries affected will be screened for symptoms of the disease. More>>

ALSO:

Scoop Business: Brewer Seeking Crowd-Funding Cancels Shareholders’ Dividends

Shareholders in Renaissance Brewing company, the first business to seek equity through crowd-funding in New Zealand, have cancelled their claim on $147,000 of accumulated earnings “to make Renaissance a more attractive investment opportunity.” More>>

ALSO:

Get More From Scoop

 
 
Computer Power Plus

Standards New Zealand

Standards New Zealand
 
 
 
 
 
 
 
 
Business
Search Scoop  
 
 
Powered by Vodafone
NZ independent news