In the global bond market, the recent sharp rise in yields was halted for now after Brainard’s comments.
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“I would argue that policy today must rely less on the old normal as a guidepost and instead be sensitive to the contours that shape today’s ‘new normal, ‘ ” she said, adding it might be time for the Fed to consider neutral interest rates, which neither boost nor slow the economy.
Brainard, considered the most dovish among the Fed governors. That’s when stocks tumbled back toward their early July values on news of an unexpected speech to be given on Monday by Federal Reserve Governor Lael Brainard.
Brainard’s speech was closely watched in part because it was the last scheduled by a Fed official before the central bank’s meeting on September 20-21.
Futures for the Dow Jones Industrial Average YMZ6, -0.48% slumped 124 points, or 0.7%, to 18,123, while those for the S&P 500 index ESZ6, -0.55% lost 14.15 points, or 0.7%, to 2,137.75.
Traders are betting the Fed won’t make a move on rates in September.
One bright spot in the market was Apple, which jumped 2.7 percent after two US carriers reported strong demand for the new iPhones.
“With a number of dissenting voices however the future is still unclear and it remains to be seen if investors have the desire to push markets higher amid the backdrop of political and economic uncertainty”.
“She should be ashamed of herself”, the Republican presidential nominee said on CNBC. The S&P 500 was up 31.23 points, or 1.47 percent, to 2,159.04. Though she remained tight-lipped bout when the expected rate hike may come, she did mention that the USA labor market isn’t yet running at full capacity, which means that “the case to tighten policy preemptively is less compelling”.
That was down from about 35 percent in late August, when some Fed officials openly discussed the possibility of a September rate hike. The panel last raised rates in December.
However, another trigger for the turmoil of the last few days was disappointment that the European Central Bank did not signal an extension of its bond-buying stimulus program at its meeting last Thursday.
Citing the weakening of emerging markets and China’s corrective policies over the past year, Brainard said the case for tightening monetary policy preemptively had become less compelling.
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Some Fed watchers think investors have it wrong: They say Brainard is in the minority on the central bank’s policymaking board and that the Fed will vote to raise rates next week. Speaking before Brainard he said that there “doesn’t appear to be a huge urgency” for the Fed to do anything. Fed Bank of Atlanta President Dennis Lockhart on Monday repeated his call for a “serious discussion” about raising rates this month, even after some recent disappointing economic data.
