New York Federal Reserve President Bill Dudley, a dovish member of the FOMC close to Fed Chairman Ben Bernanke’s inner circle, is giving a speech in New York this morning.
Dudley is one of many Fed speakers this week, but markets are more sensitive to his comments than others, evidenced by the way they just reacted to the release of his prepared remarks at 10 AM.
Dudley’s speech sounds dovish. After reiterating what Fed Chairman Ben Bernanke said at the FOMC press conference last week about how it may be appropriate to begin tapering back quantitative easing later this year, and that there were improved underlying fundamentals in the economy, look at some of the other points he made:
- There’s still “a great deal of slack in the economy”
- The labour market “cannot be regarded as healthy”
- The economy may “diverge significantly” from the FOMC forecasts (on which the QE tapering timeline is dependent)
- QE may be prolonged if the economy misses FOMC forecasts
Again, no real revelations from Dudley that the Fed hasn’t already said, but on balance, a dovish message for markets.
Nonetheless, stocks got knocked down a few points on the headlines, and bonds are drifting lower after an initial sharp decline relative to price action earlier today. Gold is headed lower as well.
The chart below shows the reaction in 5-year U.S. Treasury futures.
Business Insider Emails & Alerts
Site highlights each day to your inbox.