Commentators point to a global as well as US resurgence of COVID-19 infections, driven by new variants which appear to be more contagious. The main fear seems to be slower growth caused by a combination of new health restrictions and higher inflation that forces the Federal Reserve to tighten monetary policy.
US President Joe Biden, in a curious statement Monday, said he had reminded Fed Chairman Jerome Powell recently that the Fed is independent, and “should take whatever steps necessary” to support the economy.
Hmm. Is that a green light to tighten policy by tapering bond purchases or hinting at rate hikes? Or is it a trap—slyly passing the buck to the Fed to take the heat for stymying economic growth?
In any case, why should the Fed chairman need reminding that he is independent, aside from the looming question of his reappointment?
Major US stock measures were down 1.5 to 2.1% across the board on Monday.
At the same time, the yield on the benchmark 10-year Treasury note plunged below 1.2% to about 1.18% before recovering in late trading, its lowest level in five months.
Nor was the stock selloff and bond rally confined to the US. Germany’s DAX index of 30 blue chip stocks
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