@@@@ GLOBAL ECONOMIC REVIEW @@@@ GLOBAL ECONOMIC REVIEW U.S Markets * Wall Street edges lower with Fed speakers in focus * U.S. Treasuries weaken; Brent, U.S. crude fall * Dollar climbs to one-month peak vs yen, nears 100 yen Global equity markets and government debt prices fell on Tuesday as investors worried about the Federal Reserve reducing its stimulus, a critical support for asset prices and the economy. German Bunds hit three-week lows, tracking weaker prices for U.S. Treasuries, as investors made room for this weeks latest supply of U.S. government debt. A measure of global equity performance was down slightly as stocks on Wall Street and in Europe fell, a day after the Dow Jones industrial average hit yet another record close. Quantitative easing suppresses market volatility, but at what cost? Matt Toms, head of public fixed income at ING Investment Management, said of the Fed stimulus. Would removing quantitative easing act as a volatility accelerant? We saw that happen in May. Other far-reaching factors could minimize any volatility that ensues from fewer Fed purchases of Treasuries and mortgage-backed securities, however. Theres a great yearning for stability, so higher yields will bring cash off the sidelines into fixed-income assets, Toms said, and those flows would keep downward pressure on rates. Also, the Fed, along with the European Central Bank and Bank of Japan, fear deflation, Toms noted. Investors pored over remarks from Fed officials for clues about potential Fed tapering. Atlanta Fed President Dennis Lockhart sounded a dovish note, citing downside risks to the 2014 economic outlook. He said consumer spending needed to rise and the fiscal drag on economic growth had to fade. Monetary policy overall should remain very accommodative for quite some time, he added. But Dallas Fed President Richard Fisher, predictably, told CNBC cable television that the Feds monetary stimulus program cannot continue forever. Read more »
Posted on: Wed, 13 Nov 2013 02:55:12 +0000
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