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

 

Air NZ Wine Awards: Victory For Villa Maria As Pinot Noir Thrills

It was a night to remember as Villa Maria Estate picked up one of the highest accolades of the evening, the O-I New Zealand Reserve Wine of the Show Trophy, at the 28th Air New Zealand Wine Awards. The Villa Maria Single Vineyard Southern Clays Marlborough ... More>>

ALSO:

Future Brighter Money: RBNZ Releases New Bank Note Designs

New Zealand’s banknotes are getting brighter and better, with the Reserve Bank today unveiling more vibrant and secure banknote designs which will progressively enter circulation later next year. More>>

ALSO:

Commerce: Supermarket Inquiry Finds No Breaches By Countdown

The Commerce Commission inquiry into anti-competitive behaviour by Countdown supermarkets, alleged by former Labour Party MP Shane Jones, has found nothing to warrant prosecution, although it warns supermarkets to take care in the way they communicate... More>>

ALSO:

Crown Accounts: English Flags ‘Challenge’ To Budget Surplus

Finance Minister Bill English is warning next month’s half yearly fiscal and economic update from the Treasury may not forecast a budget surplus, saying that returning the government’s accounts to surplus in 2015 will be “a challenge”, given the decline in commodity prices and weak global inflation. More>>

ALSO:

March 2015: Netflix To Launch In Australia And New Zealand

World’s Leading Internet Television Network to Offer Original Series, Movies, Documentaries, Stand-Up Comedy Specials and TV Shows for Low Monthly Price More>>

ALSO:

Price Of Cheese (Is Up): Dairy Product Prices Fall To Five-Year Low

Dairy product prices fell in the latest GlobalDairyTrade auction to the lowest level in more than five years, led by declines in rennet casein and skim milk powder. More>>

ALSO:

Gordon Campbell: On The Australians Scoring Trade Points Against Us With The Chinese

It hasn’t been a great year for Trade Minister Tim Groser... To top it off, Australia has just signed a FTA with China that has far better provisions on dairy exports than what New Zealand currently enjoys in our own FTA with China. More>>

ALSO:

Iwi & Local Consultation: Oil And Gas Block Offer 2015 Begins

Energy and Resources Minister Simon Bridges today announced the start of the Block Offer 2015 process for awarding oil and gas exploration permits. More>>

Get More From Scoop

 
 
Standards New Zealand

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