Mnuchin isn't blaming Fed for market rout

Mnuchin isn't blaming Fed for market rout

Mnuchin isn't blaming Fed for market rout

That is bad news for homebuyers and other prospective borrowers.

But it amounts to good news for the long-term direction of the economy.

Treasury Secretary Steven Mnuchin said Friday the USA economy remained strong and this week's decline in the stock market was "just a natural correction". Unemployment in September fell to its lowest rate in almost half a century.

The remarks are some of the most specific statements that senior Fed officials have given about when they anticipate halting their campaign of higher interest rates.

The Nasdaq has fallen 8.5 percent from its record closing high on August 29. As the rates rose, there would be a drop-off in demand for loans.

The weakness in the dollar and yields have helped to underpin lower-yielding and noninterest-bearing assets such as gold, which until yesterday had hardly responded to the recent stock market weakness. "It's reflecting the possibility that this recovery has further legs".

Yet the climb in interest rates also reflects an economy that's still managing to accelerate on the energy of an expansion in its 10th year - the second-longest such streak on record.

The yields of inflation-protected bonds have moved mostly in lock step with traditional bonds in recent weeks, suggesting that traders haven't become more anxious about inflation.

If the public doesn't believe the government is committed to keeping prices stable - because, say, an election is coming - businesses might start preemptively jacking up prices.

Officials expect more dead as rescuers probe Florida hurricane debris
Officials didn't say whether anyone else was in the vehicle . "When it came to this hurricane, it was an overachiever", he said. Several storm surge and tropical storm watches and warnings remain active for parts of SC and North Carolina.

Google+ to shut down after breach involving 500,000 users
What's probably more interesting to most users is that the advertising giant opted to not disclose the issue. Do share your thoughts and opinions on Google + being shut down in the comments section below.

Colorado Rockies Douse Wrigley Field In Champagne After Upsetting Cubs
For lack of a better term, sometimes you need to get your di$% knocked in the dirt to appreciate it where we're at. The Rockies only scored two runs ... but it was enough it reinforced what got the Rockies to this point.

Despite a booming USA economy, low inflation and low unemployment, investors are concerned about rising bond yields that have been drawing money out of the stock market, and increased U.S. interest rates.

So, with higher interest rates and the higher cost of fuel at this point in time, the Fed had created a situation where the market can go into hibernation and just stay where it is for the next few years.

That may cause some heat for Powell, but it's unlikely to bother the financial markets. Now the Fed's own projections are consistent with the path of rate increases priced into markets. "So the Fed is taking its independent course", he said. But some estimate the neutral level could be higher in the short run according to reporting by the Wall Street Journal's Michael S. Derby.

Mnuchin declined to speculate on why investors might be becoming more anxious about the clash with Beijing. As big USA companies give updates in the coming weeks on how much they earned during the summer, investors will listen as CEOs say how much of an impact they're seeing from higher rates.

"The key issue is that when the president of the United States blatantly politicises the Fed, he makes it much harder for the Fed", Mr Summers said on CNBC. "The trend is clearly up, and the market is betting that will continue". So the jobs data might have suggested to the market that the Fed would accelerate its rate-hiking cycle, beyond one more in December and three more next year, as it implied in its policy meeting on September 26. Going back even further, it's another piece of evidence that the long run of declining interest rates, which began in the early 1980s, is over. If that doesn't justify a moderation of the markets' recent exuberance, what would?

Mortgage buyer Freddie Mac said Thursday the rate on 30-year, fixed-rate mortgages jumped to an average 4.90 percent this week from 4.71 percent last week.

Donald Kohn, who served for eight years on the Fed board, said he thought Trump's criticism would have no effect on Fed policy.

And markets, even deep and liquid ones like the bond market, aren't always right, and are frequently wrong. One is that USA bond yields are poised to soar.

Related news