When Constance Hunter looks at the Federal Reserve Bank and US economy, she sees some positive and negatives like all economists do. She also says the Fed didn’t fool markets when it didn’t change its quantitative easing in September. Actually, she argues that the Fed was doing just what they said they would do.
Hunter, who joined audit, tax and advisory firm KPMG as its chief economist, Alternative Investments in June, says that the markets misread Fed Chairman Ben Bernanke’s comments about tapering its quantitative easing program in September. In an interview with John Lothian News editor-in-chief Jim Kharouf, Hunter says the Fed has been quite direct with the bond market about its strategy, direction and potential moves over the past several months. That may strike some in the market as odd, because many in the bond market were surprised to see the Fed hold its line again in September on QE, and maintain the policy again.
In Hunter’s view of the Fed, it has been remarkably clear in its remarks about what it was planning to do at the most recent Federal Open Market Committee last month. Not only has Bernanke said that the decision to taper its QE program would be determined by key economic data, but other Fed governors in prior months had emphasized that point as well, she says.
Hunter, who was in Chicago speaking at the CTA Expo on September 19th, also advises that traders take a long look at Fed governor Janet Yellen’s comments about tapering as well. Yellen, who is considered the frontrunner to succeed Bernanke, has also been saying that the Fed’s moves on QE will be data driven.
A full-length video of Hunter’s speech will be available on the CTA Expo website in the coming weeks. In it, Hunter discusses not only the Fed, but also takes a long look at the US, Europe and Japanese economies, along with a detailed discussion of various economic quadrants that help indicate where these economies are headed in the coming months, as well as China and its precarious position.