Chair of the Federal Reserve Board might be the most powerful job in global finance, and if Janet Yellen is confirmed, her views will weigh heavily on policy decisions — and influence financial markets — for at least the next four years. Yellen should be considered a dovish central banker, relative to other Fed officials.
The most recent reports from the Bureau of Labor Statistics give conflicting pictures of employment data. Despite payroll gains, the overall quality of hiring is generally poor and the labor force participation rate dropped. The economy appears to have weathered the government shutdown surprisingly well, but remains stuck near 2% growth. After all the angst
An inflation slowdown in the Eurozone has prompted calls for central bank action, as reduced liquidity coupled with euro strength threatens the recovery. The expectation of imminent easing by the ECB should assert downside pressure on yields, and lead Bunds to outperform other markets. It is uncertain whether the ECB will act this week; we
After a data vacuum of almost three weeks, government agencies have started to gear up again with key reports; unfortunately, they present a picture of economic activity in the third quarter that ended on a soft note. While the third quarter is typically the weakest in a given year, the current trend in employment is
Heightened uncertainty around quantitative easing is mostly a short run problem. We see roughly flat odds of 20% for tapering at each of the next four meetings—December, January, March and April—and an additional 20% chance that the current QE pace continues beyond that. We have turned modestly more cautious about interest rate risk in our
Economic data confirm that the Eurozone has exited recession. There are signs that corporate transactional activity is increasing as businesses become more financially secure. While Europe remains beset by challenges, the economic background is improving, valuations are looking more attractive and investors who have not been paying attention to European stocks may want to take
Labor market issues have long taken a central role in Janet Yellen’s career. Remarks indicate Yellen views current labor market challenges as potentially very costly for the economy, and she sees a role for monetary policy in promoting recovery. Yellen’s nomination likely raises the bar for Fed tightening, as long as inflation remains low. When