Bernanke's Prepared Remarks Provide Early Boost
Before the Joint Economic Committee, Bernanke's prepared testimony has provided an early boost for bond markets. (watch it live
) as he essentially says "we know what we're doing.' Here are the bullish highlights:
- Inflation is stable and likely to stay that way
- Policy is providing significant benefits
- Tightening too soon would carry substantial risk
- FOMC has made it clear it's ready to reduce QE if needed
- Policy has helped offset deflation pressures
- FOMC is aware of the risks of QE and low rates
- We'll continue bond buying until substantial labor market improvement
Taken together, these comments do much to address the burgeoning speculation over the past two weeks and provide something of an inoculation against any tapering comments in the Minutes later today. After all, this is the Chairman, whereas the Minutes will give voice to the FOMC members on the other end of the spectrum.
Fannie 3.0s are now up 9 ticks at 103-01 and 10yr yields are down to 1.9002. Bernanke is just wrapping up his prepared remarks and will soon being the Q&A portion. So far so good... With economic improvements (relative) to lean on, low inflation, and strengthening housing market, Ben has room to put pressure on congress regarding fiscal policy and take some of the focus off monetary policy. He looks like he's ready to 'dish it out' a bit today, so it should be interesting.
Keep in mind this speech is distinct from the FOMC Minutes which will be released later today at 2pm.