By perfectly calibrating his message, this time, Bernanke was able to taper yet see equities climb by 1.75% and bond prices barely budge. Quite a difference from this past May. By combining tapering with a commitment to keep short-term rates low into 2015, Bernanke has reduced uncertainty and compensated markets for the knowledge that QE will shortly be history. He’s also emphatically saying that 2014 will be pretty good. Bravo!
Tag Archives: short term interest rates
Bond Market Message
Bond markets are sending a strong message! That short term interest rates are higher in Canada than here is testament to the relative strength of their economy. The fact that their long rates are lower than ours suggests their long term fiscal and inflation outlook is also better than ours; they have no yawning budget deficit or debt. The moral, look to the Cold White North for more than just good hockey players.