St. Louis Fed President James Bullard said Monday the recent sharp stock market sell-off was relatively benign given that it was not driven by a sudden negative shift in investor perceptions about the economic outlook.
The Dow Jones Industrial Average DJIA, +1.36% fell sharply at the beginning of February into a technical correction, though it’s recovered much of those losses since then.
“One thing about this sell-off in equity markets that just occurred, it did not seem to be associated with a re-think of global growth prospects or U.S. growth prospects, so in that sense, I think the sell-off was relatively benign compared with other ones that had been associated with some kind of market reassessment of risks globally,” Bullard told reporters after a speech to the National Association of Business Economics in Washington.
“That didn’t really happen this time around, so that is an encouraging sign,” he added.
Bullard noted that the St. Louis Fed’s financial stress index has moved higher in the wake of the market retrenchment but it is still “not at particularly high levels.”
Bullard was also nonplussed by the recent rise in the 10-year Treasury yield