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

 

Media: Julian Wilcox Leaves Māori TV

Māori Television has confirmed the resignation of Head of News and Production Julian Wilcox. Mr Maxwell acknowledged Mr Wilcox’s significant contribution to Māori Television since joining the organisation in 2004. More>>

ALSO:

Genetics: New Heat Tolerant Cow Developed

Hamilton, New Zealand-based Dairy Solutionz Ltd has led an expert genetics team to develop a new dairy cow breed conditioned to thrive in lower elevation tropical climates and achieve high milk production under heat stress. More>>

Fractals: Thousands More Business Cards Needed To Build Giant Sponge

New Zealand is taking part in a global event this weekend to build a Menger Sponge using 15 million business cards but local organisers say they are thousands of business cards short. More>>

Scoop Business: NZ Net Migration Rises To Annual Record In September

New Zealand’s annual net migration rose to a record in September, beating government forecasts, as the inflow was spurred by student arrivals from India and Kiwis returning home from Australia. More>>

ALSO:

Scoop Business: Fletcher To Close Its Christchurch Insulation Plant, Cut 29 Jobs

Fletcher Building, New Zealand’s largest listed company, will close its Christchurch insulation factory, as it consolidates its Tasman Insulations operations in a “highly competitive market”. More>>

ALSO:

Scoop Business: Novartis Adds Nine New Treatments Under Pharmac Deal

Novartis New Zealand, the local unit of the global pharmaceuticals firm, has added nine new treatments in a far-ranging agreement with government drug buying agency, Pharmac. More>>

ALSO:

Crown Accounts: English Wary On Tax Take, Could Threaten Surplus

Finance Minister Bill English is warning the tax take may come in below forecast in the current financial year, as figures released today confirm it was short by nearly $1 billion in the year to June 30 and English warned of the potential impact of slumping receipts from agricultural exports. More>>

ALSO:

Get More From Scoop

 
 
Standards New Zealand

Standards New Zealand

Mosh Social Media
 
 
 
 
 
 
 
 
Business
Search Scoop  
 
 
Powered by Vodafone
NZ independent news