Treasuries Gain as U.S. Economic Growth Is Slower Than Forecast
It would seem that the celebrations about a recovering economy started a little too early. There is a looming slowdown threatening to appear in the U.S. recovery. Recently, some economists were considering the possibility of tapering off the current stimulus policy in place by the Fed, but those plans will surely be halted now. Consumers seem to be losing faith. Confidence has slipped, and “the economy has already lost momentum.”
In observing the treasury markets, there seems to be the belief that the government will be continuing its quantitative easing for quite some time. Volatility has hit a record low and the ten-year note yield continues to fall. The current yield, 1.155, is lower than the forecast from a Bloomberg news survey, 1.163.
It would seem that the lingering recession is still on the economy’s tail, forcing the Fed to remain aggressive in its fight against deflation. Thankfully, the Fed has set benchmarks that it hopes to reach through its quantitative easing, and until those goals are all reached, it is expected that Bernanke will stay the course. However, Bernanke may not be the one in charge of the recovery efforts if the process takes too long, since his second term ends in January 2014.