The Federal Reserve chair Janet Yellen’s remarks at yesterday’s much-anticipated Jackson Hole symposium has failed to attract the desired cheer from the market. Stock markets initially trimmed gains on Yellen’s speech, and then recovered on relief that any rate rise could be some way off, only to drop again.
“The biggest speech of the year has come and gone. And traders are acting like they heard nothing groundbreaking”, seemed to be the market mood.
The main headline from Yellen’s speech was that she believed ‘the case for another interest rate hike has strengthened in recent months’. On the face of it, and initially, Government bond yields quickly moved higher and global stocks gave back some gains. But after digging into the meat of her speech, it became clear for the market that she really wasn’t saying anything new. The initial moves quickly reversed course, after the headlines created a knee-jerk reaction in various markets.
“ Yellen’s comments were relieving and positive for oil and regional (read GCC) equities. Oil price’s initial response was also positive taking Brent above $50”, a top Doha-based Fund Manager told The Peninsula, shortly after Yellen concluded her speech at the annual symposium at Kansas City.
Key worry on most investors’ minds was slowing down global growth despite near zero interest rates in most countries. Hence comments of growth trend being positive by Fed are taken positively by markets. Many developed countries as well as countries like China have very high debt to GDP levels and have been trying to stimulate their growth both with monetary policies as well as fiscal spending.
The $13.5 trillion US Treasuries market was the one key portfolio that has been waiting for some clarity from yesterday’s Jackson Hole outcome. With Bank of Japan, the European Central Bank and several smaller European authorities venturing into the territory of negative interest, the dramatic drop in bond yields have been weighing on pension funds for long, an asset class of an estimated $35.4trillion, spelling doom on millions of retirees across the globe. The problem is more acute in the UK, where gilt yields have tumbled to unprecedented lows since June’s vote to leave the EU. The UK’s 350 largest listed companies face a shortfall up to £149bn in their pension plans. The market is now struggling to make sense of yesterday’s speech from Yellen.
The market has been waiting anxiously for Yellen’s speech, as members of the Federal Reserve often presented conflicting views on rate hikes. Now, Yellen’s speech has failed to generate that gyration the market has been looking for.
The Federal Reserve chair Janet Yellen’s remarks at yesterday’s much-anticipated Jackson Hole symposium has failed to attract the desired cheer from the market. Stock markets initially trimmed gains on Yellen’s speech, and then recovered on relief that any rate rise could be some way off, only to drop again.
“The biggest speech of the year has come and gone. And traders are acting like they heard nothing groundbreaking”, seemed to be the market mood.
The main headline from Yellen’s speech was that she believed ‘the case for another interest rate hike has strengthened in recent months’. On the face of it, and initially, Government bond yields quickly moved higher and global stocks gave back some gains. But after digging into the meat of her speech, it became clear for the market that she really wasn’t saying anything new. The initial moves quickly reversed course, after the headlines created a knee-jerk reaction in various markets.
“ Yellen’s comments were relieving and positive for oil and regional (read GCC) equities. Oil price’s initial response was also positive taking Brent above $50”, a top Doha-based Fund Manager told The Peninsula, shortly after Yellen concluded her speech at the annual symposium at Kansas City.
Key worry on most investors’ minds was slowing down global growth despite near zero interest rates in most countries. Hence comments of growth trend being positive by Fed are taken positively by markets. Many developed countries as well as countries like China have very high debt to GDP levels and have been trying to stimulate their growth both with monetary policies as well as fiscal spending.
The $13.5 trillion US Treasuries market was the one key portfolio that has been waiting for some clarity from yesterday’s Jackson Hole outcome. With Bank of Japan, the European Central Bank and several smaller European authorities venturing into the territory of negative interest, the dramatic drop in bond yields have been weighing on pension funds for long, an asset class of an estimated $35.4trillion, spelling doom on millions of retirees across the globe. The problem is more acute in the UK, where gilt yields have tumbled to unprecedented lows since June’s vote to leave the EU. The UK’s 350 largest listed companies face a shortfall up to £149bn in their pension plans. The market is now struggling to make sense of yesterday’s speech from Yellen.
The market has been waiting anxiously for Yellen’s speech, as members of the Federal Reserve often presented conflicting views on rate hikes. Now, Yellen’s speech has failed to generate that gyration the market has been looking for.
