Fed’s Bullard Calls Current Sell Off as a Benign Correction

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

via MarketWatch

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Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza