Headlines from the Bernanke speech:
- BERNANKE SAYS FED READY TO ACT, REFRAINS FROM DETAILING STEPS
- BERNANKE: `FISCAL CLIFF' IN 2013 POSES A `SIGNIFICANT THREAT'
- BERNANKE SAYS U.S. BUDGET TREND `IS CLEARLY UNSUSTAINABLE'
- BERNANKE: EUROPE CRISIS IMPAIRING EXPORTS, CONSUMER CONFIDENCE
- BERNANKE SAYS EUROPE CRISIS POSES `SIGNIFICANT RISKS' TO U.S.
But the kicker, as we explained a few days ago, [12]is the Chairman's hint that more QE would come in the form of additional Twist, not LSAP:
In addition, the Federal Reserve has been conducting a program, announced last September, to lengthen the average maturity of its securities holdings by purchasing $400 billion of longer-term Treasury securities and selling an equal amount of shorter-term Treasury securities. The Committee also continues to reinvest principal received from its holdings of agency debt and agency mortgage-backed securities (MBS) in agency MBS and to roll over its maturing Treasury holdings at auction. These policies have supported the economic recovery by putting downward pressure on longer-term interest rates, including mortgage rates, and by making broader financial conditions more accommodative. The Committee reviews the size and composition of its securities holdings regularly and is prepared to adjust those holdings as appropriate to promote a stronger economic recovery in a context of price stability.
Full testimony here [13]
Finally, judging by the testimony word cloud, this is nothing but a scapegoating session: with Fiscal the most used word, it is clear what is going on: "It is all Congress' fault"
[14]
At the rate the market has soared in the past 3 days, one would think Bernanke has already formally announced QE. Instead we have had a rumor, a hint, and a headline. All of this was sufficient to push the DJIA up 500 points. Problem is there has been nothing official from the Fed. Which is why everyone will be looking for the Chairman to leak something at the 10am hearing before the Joint Economic Committee. Otherwise, if nothing comes now, and nothing comes on June 20, we may be looking at another deja vu event from 2011: namely the August 2011 market crash.
From C-Span
Federal Reserve Chairman Ben Bernanke goes before the full Joint Economic Committee for a quarterly hearing to review the economic outlook for the nation.
Committee Chairman Senator Bob Casey (D-PA) is expected to press Mr. Bernanke on possible action by the Federal Reserve to stimulate the economy in light of last week’s unemployment numbers and recent global economic uncertainty.
In an interview with C-SPAN, Joint Economic Committee member Rep. Mick Mulvaney (R-SC) said the GOP will question Chairman Bernanke on the possibility of monetary easing. He also stated his plan to speak with the Fed Chief about the negative implications of inflation.
Bernanke is expected to reiterate his call for Congress and the Administration to work on long-tern legislation to lower the deficit. He told a House panel in February that the economic recovery is "frustratingly slow" which should "prompt Congress to enact policy that will address the crisis."
The Joint Economic Committee, established under the Employment Act of 1946, was created by Congress to review economic conditions and analyze the effectiveness of economic policy.
Live webcast below starting at 10 am [15]
[15]
Full Bernanke speech:
Bernanke Speech 6.7 [16]