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Less Dovish Fed Speak Heightens Risk of Market Shock: G+ Econ 2014-08-24 20:25:27.427 GMT
By Madeleine Lim Aug. 24 (Bloomberg) -- Investors will begin to price out financial repression by raising risk premiums on front-end UST yields, exiting global EM carry trade, G+ Economics chief economist Lena Komileva writes in note. * Yellen signaled in Jackson Hole speech Friday that fighting “labor deflation” no longer a policy concern, which means Fed’s room for extended monetary stimulus is diminishing * Dilutes “considerable time” commitment for keeping rates low; shift toward policy normalization means end to Fed’s low-vol policy framework, in which markets still remain highly invested * Even small shifts in Fed language in more hawkish direction may have large ripple effects on global markets
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To contact the reporter on this story: Madeleine Lim in New York at +1-212-617-2296 or mlim131@bloomberg.net To contact the editor responsible for this story: Madeleine Lim at +1-212-617-2296 or mlim131@bloomberg.net